Allowances to increase only by Tk 50 to Tk 100 after 7 years

In the upcoming fiscal 2023-24, the budget for the social safety net programmes will see only a slight increase. Allowances in certain programmes will see a rise by Tk 50 to 100. Notably, the government has made the decision to raise this allowance after seven years. In addition to the nominal increase in allowances, the number of beneficiaries will be expanded as well.

In the budget of the current fiscal 2022-23, the allocation for the social safety net programmes was Tk 1.13 trillion. Sources from the finance division of the finance ministry said, Tk 1.26 trillion is likely to be allocated in this programme in the next fiscal, which is less than 3 per cent of the gross domestic product (GDP).

Experts suggest that the government often fails to provide adequate funds for social safety net programmes. Consequently it includes some programmes in the category that do not genuinely qualify as social safety net programmes. The government incorporate sall that programmes as social safety nets as a strategy to show more total allocation in these sectors.

For instance, the difference between the rate of interest earned on fixed deposits in banks and the interest paid by the government on savings certificates is shown as social safety net expenditure. Furthermore, the government incorporates the pension received by the government employees within the category. The International Monetary Fund (IMF) has raised objections to both issues. Among the conditions relayed by the agency for granting USD 4.7 billion loan, are suggestions that interest on savings certificates and pensions should not be included in the social safety net bracket.

Professor Bazlul Haque Khondker of Dhaka University's Department of Economics, who is associated with research on the social safety net programmes, told Prothom Alo that the social safety net programmes are quite confusing. The government tends to repeatedly classify the same programmes within the social safety net category to portray larger allocations. Additionally, the reform process in this sector has been notably sluggish.

Allowance to increase after seven years

There will be eight programmes for cash assistance or allowance in the next fiscal as well. Around Tk 418.21 billion has been allocated for these eight programmes in the prevailing fiscal. The allocation may rise by Tk 30 billion to about Tk 450 billion.

The eight programmes are old age allowance, allowance for widows, deserted and destitute women, disability allowance; allowance to improve the quality of life of hijra (transgender), bede and disadvantaged communities; mother and child support scheme, honorarium for freedom fighters, medical allowances and honorarium for martyrs' families and injured freedom fighters and pension for retired government employees.

Sources in the finance division said that out of the Tk 450 billion allocated for these eight programmes, Tk 300 billion will be spent on pension of around 800,000 retired government employees.

However, the government has decided to increase the monthly allowance of the country's poor elderly men and women, widowed, deserted and destitute women and those with disabilities ranging from Tk 50 to Tk 100 for different programmes. Along with the allowance, the number of beneficiaries will also increase nominally.

In December 2015, the government issued a notification for the National Pay Structure for government employees. The salary and benefits were made double at the time. The old age allowance and allowance for widowed, deserted and destitute women was Tk 400 per month. It was increased by Tk 100 to Tk 500 in 2016-17 fiscal, which was effective from July 2016. It didn't increase after that. However, the purchasing capacity of people went down significantly due to inflation.

At present, 5.7 million men and women receive old age allowance. According to the sources of the finance division, beneficiaries will be increased by 100,000 in the next budget. The allowance will be increased from Tk 500 to Tk 600 per month. Apart from this, currently 2.475 million widows receive monthly allowance of 500 taka each. This programme will have another 100,000 beneficiaries in this fiscal. And the allowance will increase by Tk 50 per month at Tk 550.

Now a total of 2.36 million people with disabilities receive allowance. In the next budget, this number will be increased 535,000 to 2.9 million. However, the amount of allowance will remain same at Tk 850.

Allocation for food security will increase

Tk 154.08 billion have been allocated in 11 categories under food security and employment creation programmes such as TR, GR, VWB, OMS, food friendly programme, VGF and so on in the current fiscal. The allocation for these programmes may increase by Tk 20 billion. Through these programmes, the government sells rice and flour at low prices to the people. Again, various projects are undertaken in the rural areas to create employment opportunities.

The allocation for student stipend in the budget may increase by Tk 1 billion. At present, the allocation for this sector is Tk 44.17 billion. However, the amount of scholarship will not increase.

According to Rasheda K Chowdhury, the education advisor of the former caretaker government, the scholarship amount has remained unchanged at Tk 150 for primary and Tk 200 for secondary schools since 2015. However, taking inflation into account, the value of Tk 150 has now decreased to Tk 80. Considering the significance of investing in human resources, it would not impose a substantial burden if the government were to raise the amount to Tk 500.

Agricultural subsidy may increase from Tk 125 billion to Tk 150 billion this fiscal. An allocation of Tk 50 billion has been made for interest subsidy to the SME sector. As the Covid situation eased, the allocation in this category will be reduced significantly in the new budget.

Tk 105 billion have been allocated for nine funds and programmes, including climate change fund of Tk 1 billion, women's development fund of 1.25 billion and women entrepreneurs fund in the current budget. This allocation will be slightly reduced in the next budget as a few of those programmes may be dropped this year.

The allocation of 13 programmes like Sheikh Russell Child Training and Rehabilitation Center, Joyeeta Foundation may increase to k 7.5 billion in the next budget.

Portraying higher allocation

Among the 115 social safety net programmes are food security programmes like food for work, food friendly programmes, open market sales (OMS) and disaster relief programmes. The government includes some loan assistance programmes, about 50 projects in the development sector, 8 programmes in the social safety net. The total number of beneficiaries is about 530 million.

Experts believe the government incorporates schemes and programmes in social safety net category to show a large number of beneficiaries. However those programmes do not qualify as social safe programmes. For instance, the finance division has also included projects related to Joyeeta Foundation such as capacity building and building construction projects within social safety category.

In the next fiscal, there will be allocations for 11 categories of food security and job creation programmes, six for scholarships, 17 for cash and food assistance, two for loan assistance, 13 for special communities and people, nine for various funds and programmes and 50 development programmes. Sectors which do not align with the real definition of social safety net are often included within the category.

Researcher Bazlul Haque Khondker said comprehensive reforms are required in the social safety net. He emphasised the importance of considering social assistance, social insurance, and labour market-based programmes. Khondker noted that the majority of the allocation has thus far been directed towards rural areas, and it is crucial to include urban areas in the programme to prevent discrimination.

*This report, originally published in Prothom Alo print edition in Bangla, has been rewritten in English by Farjana Liakat