Govt spends big on poverty cuts, but impact unclear

CPD spotlights budget resources for the poor

The government spends more than 55 percent of allocations in the national budget to reduce poverty but the impact of the expenditure remains unclear.
This was shared at a dialogue where leading economist Prof Rehman Sobhan urged the government to share with people information on the outcome of spending over half of the total budgetary allocations on poverty reduction.
"This must be the first area of accountability of the government. We need to know about the outcome of the expenditure. We need to know about the constraints too," said Sobhan at the discussion, “Resources for the Ultra Poor in the National Budget: How Much? How Effective?”
The Centre for Policy Dialogue (CPD) and nongovernmental organisation Brac organised the discussion at Brac Inn where Food Minister Muhammad Abdur Razzaque also spoke.
At the dialogue, CPD's Head of Research Fahmida Khatun showed that the government's poverty reduction expenditure has been more than 55 percent of annual budgets since fiscal 2006-07.
In fiscal 2010-11, the government allocated Tk 76,001 crore in poverty reduction expenditure, up from Tk 61,808 crore in the previous year, according to the finance ministry.
Prof Sobhan, chairman of CPD, said the outcome of such expenditures should be made public.
Of the total budgetary allocations, a portion goes to social safety net programmes (SSNPs) to support the poor and marginalised sections.
The outlay for SSNPs, which is 14.8 percent of total budget this fiscal year, is below the average 4 percent of GDP in South Asia, according to CPD.
At present, various government agencies run 84 SSNPs to support the poor, including 25 percent of the extreme poor. Khatun said a meagre proportion of the extreme poor are covered by SSNPs.
Discussants said the governments' safety net schemes are characterised by “pilferage” and other problems, as the relatively well off people get the benefits due to a wrong selection of beneficiaries, governance problems and political influences.
"There has been wasteful expenditure and leakage due to lack of governance and political problems," said MM Akash, professor of economics at Dhaka University.
He suggested adoption of participatory processes in selecting the “really needy”.
"Unless we resort to participatory approaches in targeting beneficiaries, then we will languish in the system of business as usual and the wind of change will not come," said Akash.
AB Mirza Azizul Islam, former finance adviser to caretaker government, said the government runs many small and large programmes under SSNPs which may be one of the causes of pilferage.
He suggested merger of similar programmes to cut leakages and replication in beneficiary selection.
Brac Executive Director Mahabub Hossain said an effective use of allocation is important to help the poor.
Prof Shamsul Alam, member of the Planning Commission, said capacity of the “ultra or extreme” poor has to be increased by ensuring free education. "This is the best way of helping them lift themselves. Free quality education will help change the situation of the poor," he said.
Lawmaker Akram H Chowdhury said poverty should be seen and addressed from the right perspectives and the root causes of poverty should be addressed.
Mustafa K Mujeri, director general of Bangladesh Institute of Development Studies, said endowment for the ultra poor has to be increased. Policies should also address the issues of the ultra poor and ensure their wellbeing, he added.
Food Minister Razzaque admitted that there have been pilferages and leakages in SSNPs due to factors such as wrong selection of beneficiaries.
"We are trying to reduce pilferage. We will also try to make the selection process more transparent," he said.


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