Raging Inflation: Not much help on the way for the poor

Even though poor people are struggling to make ends meet amid runaway inflation, the government allocation for social safety net programmes may not increase much in the next fiscal year.

According to a finance ministry draft plan, social security programmes are likely to get almost Tk 1.2 lakh crore, which may end up being around 15.76 percent of the Tk 7.61 lakh crore budget for 2023-24, officials of the ministry said, requesting anonymity.

The planned allocation is slightly higher than the current fiscal's Tk 1.13 lakh crore. But in the current fiscal year, the allocation was 16.75 percent of the total budget of over Tk 6.78 lakh crore, they added.

Besides, the current social safety net allocation is 2.55 percent of the GDP (gross domestic product) while the one planned for next fiscal year is only 1.4 percent.

The first eight months of this fiscal year saw an average inflation of 8.74 percent, way above the budgetary target of 5.6 percent, according to Bangladesh Bureau of Statistics.

The runaway inflation, which pushed many people into poverty, is mainly the result of international supply chain disruptions caused by the war in Ukraine.

The government has 141 social safety net programmes. The plan for the next fiscal year is to increase the allocation for the elderly people, widows, and deserted and destitute women. The number of people who receive these allowances will also be increased.

As per the draft plan, the allowance for the elderly will be raised to Tk 600 from Tk 500, and there will be about 58 lakh beneficiaries, which is almost 1 lakh more than the current number.

This will cost the government an additional Tk 761.42 crore, taking the allocation Tk 4,305 crore.

The widowed, deserted and destitute women's allowance will be raised to Tk 550 from Tk 500, and with the inclusion of around 1 lakh names, there will be 25.75 lakh beneficiaries. The additional Tk 216 crore needed for this will take the total cost for the programme to Tk 1,711.4 crore.

Besides, the Tk 850 monthly allowance for poor people with disabilities will not change, but the number of beneficiaries will reach 24.15 lakh, due to the inclusion of 50,000 new names.

Currently, around 1 lakh students with disabilities get stipends, and this number will also rise.

However, allocations for OMS (open market sale), VGD (vulnerable group feeding), and the other programmes that help the poor buy food will not rise from the current Tk 19,000 crore.

Employment generation programmes will get Tk 24,600 crore, a Tk 5,000 crore bump.

The government spent almost 25 percent of this year's social safety allocation to provide retired government employees and their families with pension. The International Monetary Fund has been urging the government not to count this as social safety net expenses.

Social safety net programme is meant only for the poor, it said.

However, finance ministry officials say when they provide the IMF with data on social safety net programmes, they will exclude the funds spent for pension.

According to a 2021 World Bank report titled Bangladesh Social Protection Public Expenditure Review, "The inclusion and exclusion errors [in social safety net programmes] need to be addressed to improve social protection's impact on poverty. Another way of looking at the incidence of a programme is to see how many of the poor are excluded and how many non-poor are included but should not."

Citing BBS data, the report said the eligibility criteria were not met by 26.6 percent of the beneficiaries of allowance for the elderly and 38.4 percent of those in employment generation programmes.

Contacted, Planning Minister MA Mannan said the government had almost overcome this challenge.

"People are now more conscious. Our target now is to increase the number of beneficiaries instead of increasing the benefits," he said.

Finance ministry officials said the allocation for social safety net programmes would not be increased significantly because of pressing needs in areas like interest payment and subsidy.

They added that Bangladesh's allocation for the sector is not small when compared to those of other Asian countries.