Inter-Regional Variations in the Inequality and Poverty in Bhutan

Type Journal Article - Journal of Bhutan Studies
Title Inter-Regional Variations in the Inequality and Poverty in Bhutan
Volume 16
Publication (Day/Month/Year) 2007
Page numbers 38-82
The findings of this sample study suggest existence of high income disparities between the urban and rural areas and across dzongkhags. Urban areas contribute about 69% of the total income, and Average Monthly Per Capita Income of urban areas is almost four and a half times higher than that of rural areas. The Gini coefficient value is higher in the urban areas (0.58) as compared to the rural areas (0.36) reflecting higher income inequality in the urban areas. Largely, income disparities can be explained in terms of the pattern of productive assets ownership. 81% of the productive assets are found to be concentrated in the urban areas. The skewed pattern of the disbursement of bank loans indicates that income inequality is also policy induced.
The finding suggests that the head count ratio is 66.23 if measured in terms of upper poverty line and 50.66% on the basis of the lower poverty line. Poverty is more a rural phenomenon as about 86% of the poor live in the rural areas. FGT index of normalized poverty gap is 22.61% and poverty gap in the rural areas is more than three times the poverty gap in urban areas. Dzongkhag-wise, the highest incidence of rural poverty is found in Pemagatshel and Samdrup Jongkhar and lowest incidence poverty is recorded in Chukha. The poverty decomposition study conveys that farmers, private sector employees and illiterates are among the most vulnerable groups to the incidence of poverty.
One important policy implication that emerges from this analysis is that poverty alleviation measures should be concentrated in those areas where the ratio of ?NPG/?HCR is higher. An appropriate data base on poverty would make the poverty alleviation measures targeted and consequently more effective in terms of reducing the magnitude of absolute poverty.

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