Safety Net: Where does the money flow? | The Daily Star
12:00 AM, June 11, 2017 / LAST MODIFIED: 02:49 AM, June 11, 2017

Safety Net: Where does the money flow?

Above 40pc of the total allocation for FY17-18 to be spent on public servants' pension; the rest is meant for over 100 safety net programmes

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The government will keep aside almost three-fourths of the proposed increase in the social safety net allocation for giving retirement benefits to public employees in the next fiscal year.

Finance Minister AMA Muhith has suggested raising the budget for social safety programmes by 35 percent to Tk 54,206 crore, compared to the revised one of the outgoing fiscal year.

As calculated, 72 percent of the increase of Tk 13,349 crore would be spent on public servents' pension benefits leaving only 28 percent -- Tk. 3,624 crore -- for some 100 safety net programmes run by 23 different ministries.

Traditionally, the government incorporates retired public servants' pensions into the SSNP budget. This time the proposed allocation for pension benefits is more than 40 percent of the total budget for the safety net. 

According to the statistics of the Finance Division, expenditure on retirement benefits has been estimated at Tk 22, 392 crore for fiscal 2017-18 after a 76 percent increase of the revised allocation of only Tk 12,667 crore in the last fiscal year.

Officials of the Finance Division attributed such phenomenal increase to a “reform” brought in for the first time in payments of retirement benefits. Besides, the government decided to give a 5 percent annual increment to all pensioners.     

In the budget speech, Muhith said the government was going to introduce a modern, updated and non-discriminatory system of pension by reforming the existing one.

In the first phase of the reform, he said, “We have abolished the system of encashment of 100 percent pension, introduced the system of maintaining pension-related budget certainly under Finance Division instead of distributing [it] among different ministries and taken initiative to establish a separate pension office”.

From July 1, a government pensioner will receive gratuity of half of his pension and the remaining half will be disbursed in monthly pensions over the rest of his life.

Earlier, there was no annual increment, but pensioners would get a 5 percent annual increment as per the new pay scale, Muhith added. 

Apart from pension benefits, allocations for a few social safety programmes have been increased in the proposed budget.

With the next general election little over a year away, the government plans to bring more people under the safety net that would make up 13.54 percent of the total budget and 2.44 percent of the gross domestic product (GDP).

The government introduced in fiscal 2016-17 a programme to provide the ultra poor with rice at Tk 10 kg through Palli Rationing Card. It now plans to increase the expenditure for the purpose to Tk 2,600 crore from Tk. 2,021 crore.

There is another plan to replace Food for Work (FFW) programme with Money for Work (MFW) with an allocation of Tk 14,050 crore. 

In the upcoming financial year, the government is going to introduce a new programme titled “Income Generating Activities of Women at Upazila-level” that would cost Tk. 86 crore. 

Besides, the numbers of beneficiaries and allowances have been increased for the safety programmes for the elderly, widows, handicapped and lactating mothers.

In Old Age Allowance programme, some 31.50 lakh people receive Tk 500 each a month. The government is set to increase the number of beneficiaries to 35 lakh and raise the allowance to Tk 600 in the next fiscal.

Around 11.50 lakh women currently receive Tk 500 each a month under the “Allowances for the Widow, Deserted and Destitute Women” programme. The government plans to increase the amount to Tk 600 and the number of beneficiaries to 12.65 lakh.

A recently released study of the Bangladesh Bureau of Statistics shows that divorced, widowed and deserted women account for 10 percent of the total women population in the country now, up by 1.5 percent from 2013.

The government also proposed increasing the number of beneficiaries under the “Maternity Allowance Programme for the Poor” from five lakh to six lakh and raising the allowance from Tk 500 a month to Tk 700 in the next fiscal year. 

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