Tk11,295cr cash assistance for 1.28cr poor

Infographic: TBS

The government will transfer Tk11,295 crore in cash to 1.28 crore poor people under the social safety net in the upcoming fiscal year, starting in July.

This is part of the Tk43,389 crore allocated in the proposed budget for the fiscal 2023-24 to provide cash assistance to 1.38 crore poor individuals under the social safety net programmes.

Of the allocation, a significant portion, more than 63%, or Tk27,414 crore, will go to just eight lakh government employees as pension. The remaining funds will be provided as pensions and allowances to freedom fighters.

Among the cash transfers, Tk4,680 crore has been allocated as honorarium for two lakh freedom fighters.

In the upcoming fiscal year, 58 lakh senior citizens – men above 65 years and women above 62 years – will receive an old-age allowance. This segment is the largest among the beneficiaries of cash transfers.

A large part of the amount allocated in the budget every year for cash transfers under the social safety net is spent on pensions and family retirement allowances for government employees.

The government allocates the entire amount of the pension for 10th–20th grade officials and employees under the social safety net. However, most of the retirees from government jobs are above the poverty line.

For this reason, the International Monetary Fund suggested separating pension allocations from social security net allocations. However, the finance ministry did not accept it. Consequently, the allocation amount for the pension of employees in the 10th–20th grade is still included in the social security net.

The total allocation for pension is Tk32,565 crore. Out of this, Tk5,151 crore for the pension of employees from Grade-1 to Grade-9 has been kept out of the social security network.

In the proposed budget, the number of beneficiaries of old-age allowance and widow allowance has been increased by one lakh each, and the number of disabled beneficiaries has been increased by 5.35 lakh. Besides, it has been proposed to increase the amount of old age allowance from Tk500 to Tk600 per month and the amount of widow allowance from Tk500 to Tk550.

Old-age allowance was introduced for the first time on an experimental basis in the fiscal 1997-98, when four lakh senior citizens were given Tk100 each per month.

In the following year, the government started the distribution of widow allowance at a rate of Tk100 per month on an experimental basis. After three months of experimental operation, the number of beneficiaries and the amount of allowances increased along with the regularisation of old age and widow allowances.

In the fiscal 2016-17, the amount of the monthly old age and widow allowance was fixed at Tk500.

The monthly increases of Tk100 for the old-age allowance and Tk50 for the widow allowance are significantly lower when considering the rate of inflation.

According to economists, the cost of purchasing products that were available for Tk500 in July 2016 now requires Tk740.

Considering this, it is necessary to increase the allowance to Tk740 in order to provide the same level of relief that the government had previously ensured for the elderly and widows.

The monthly education stipend for disabled students has been increased for the next financial year. Tk900 per month has been fixed for primary level students and Tk950 for secondary and higher secondary levels.

Besides, the number of beneficiaries has been increased by 12,000 to improve the living standards of Hijras, Bede, and other backward communities.

Additionally, Tk11,217 crore has been shown to be allocated to the social safety net for interest payments against savings certificates out of cash transfers.

TK21,700 crore of subsidy in the agricultural sector and the amount of interest subsidy on loans of small industries and service sector institutions affected by the pandemic are also shown here.

In total, Tk1,26,272 crore has been allocated for the social safety net for the next financial year, which is 16.58% of the total budget.

In the revised budget of the current financial year, the total allocation for this sector was Tk1,17,634 crore, which is 17.81% of the revised budget. That is, it is proposed to reduce the allocation to social security compared to the revised budget in proportion to the size of the budget.

Among these five basic needs – food, clothing, shelter, education, and health – the government's social safety net has various programmes as part of food security and employment programmes in addition to cash transfers among the poor under various programmes.

While there is provision for stipends for poor students and the construction of houses for the homeless to meet housing needs, there is no provision to meet the clothing needs of the poor under the social safety net.

A fund of Tk2,000 crore is proposed to be set up in the next financial year to deal with health risks. On the other hand, the allocation for upazila health care and community based health care has been drastically reduced. In the revised budget of the current financial year, there is an allocation of Tk1,067 crore; it is proposed to reduce it to Tk184 crore in the next financial year.

The programme to distribute rice at Tk30 per kg along with TCB products to one crore families will be launched in the new financial year.

However, the allocation has been reduced by about 30% in the ongoing programme of distributing 30kg of rice per month under VGF at Tk10 per kg to the very poor. This will reduce the opportunity for the very poor to buy rice at a low price. It is also proposed to reduce the allocation in the open market sale of rice and flour (OMS). It has created a threat to their food security.

In the revised budget of the outgoing fiscal year, an allocation of Tk1,542 crore has been allocated to distribute rice to 2.57 crore families under VGF.

And in the new financial year, Tk1090 crore has been allocated for the distribution of VGF rice to 1.80 lakh families. However, even though the number of beneficiaries of the government's food-friendly programme has not increased, the allocation has been increased by Tk450 crore.

Reductions in beneficiaries and allocations are also proposed for employment programmes for the very poor. Tk1,780 crore has been allocated for creating employment for 5.18 lakh very poor people in the next financial year. In the revised budget of the current financial year, Tk2,107 crore has been allocated for creating 5.97 lakh jobs.