Social safety net allocation unlikely to increase despite rising inflation

The Ministry of Disaster Management and Relief has sought for a budgetary allocation for the next fiscal year, which experts fear will be hardly enough to help the extreme poor who are bearing the brunt of rising inflation. 

The ministry has sought Tk10,865 crore for the forthcoming fiscal 2022-23, which is only 9.19% more than the current year's budgetary allocation of Tk9,950.83 crore, according to official sources.

What is more, most of the additional allocation will be spent for the salary allowance of the ministry employees, for projects that have not been approved yet, and for the implementation of ongoing projects for Rohingyas, they said.

There will be no extra allocation for food for work, cash assistance through the development of rural infrastructure, employment for the extreme poor, and food aid programmes. Even though some sectors would receive slightly increased allocations, the increase would be negligible when compared to inflation.

In the current financial year, the Ministry of Disaster Management and Relief has allocated Tk336.71 crore to buy wheat for the food for work programme. Even after a 38% hike in prices of the cereal on the international market recently, the ministry has asked for the same amount for FY23.

As a result, the ministry would be forced to reduce the number of beneficiaries or per capita allocation under the programme.

Official documents show the disaster management ministry buys 1.25 lakh tonnes of food grains for general relief assistance and 2.10 lakh tonnes of food grains for the vulnerable group feeding (VGF) programme every year.

The ministry also conducts relief activities for around 65 lakh to 70 lakh extremely poor people in disaster-hit areas through various programmes.

Besides, it provides aid to 25 lakh poor people through the VGF programme as an immediate response to the impact of disasters.

In total, about 95 lakh people currently receive assistance under social security every year through the ministry.

The National Social Security Strategy (NSSS) recommended increasing the per capita allocation for social security every year in line with inflation. It also recommended increasing the number of beneficiaries of these programmes.

Zahid Hussain, former chief economist of World Bank, Dhaka office, told The Business Standard, "Those who made the budget proposal on behalf of the Ministry of Disaster Management and Relief probably do not have an idea about the prices of food products in the market, or they have not taken it into account."

"The marginalised population is facing a severe crisis due to rising poverty rates and needs more assistance. In this situation, the reduction in the allocation for the disaster and relief sector is a disappointment for them," he added.

"If the disaster ministry itself demands less budget, how would the finance ministry increase the allocation?", the eminent economist questions.

He further said, "If the allocation does not increase despite the commodity price hike, the per capita food distribution and number of beneficiaries will have to be reduced. However, the country is not in a position to do either of these."

Official documents of the Ministry of Disaster Management and Relief reveals that an allocation of Tk809.30 crore has been sought for the implementation of a food-for-work programme for the next financial year which is the same as the amount of the current year.

Of this, Tk336.71 crore for wheat and Tk472.50 crore for rice purchase have remained unchanged.

Moreover, Tk1,500 crore for cash relief management for rural infrastructure development, Tk992.45 crore for rice in VGF relief, Tk1,650 crore for employment of the extreme poor have been sought, which are also the same as the current budget.

The ministry has sought an allocation of Tk1,550 crore for cash relief which has increased by only Tk100 crore from the current year's allocation.

In the current budget, Tk30.78 crore has been allocated for the unapproved projects of the Annual Development Plan (ADP). In this sector, Tk140 crore has been sought for the next year.

Allocation is going to increase in the Rohingya Crisis Response Project from Tk160 crore to Tk314.56 crore.

Besides, a proposal has been made to increase the salary allowance of the employees of the ministry and its affiliated agencies by 8.9%, administrative expenditure by 17%, training expenditure by 25%, travel expenditure by 122%, innovation sector by 25%, and transport expenditure by 80%.

However, in the Medium-Term Budget Framework (MTBF) of FY21, an allocation of Tk11,815.67 crore was made for the Ministry of Disaster Management and Relief in 2022-23 FY.

The ministry has sought Tk10,865.10 crore from the long-term estimates by reducing more than 8%.

Sayema Haque Bidisha, professor of economics at Dhaka University, said, "Although the government's allocation for social security was supposed to increase every year to keep pace with inflation, it has not been reflected in the last seven years."

"The poorest people have been the worst sufferers from income losses due to the Covid-19 pandemic. As a result, the poverty rate has also increased. People are buying food at higher prices even though their income has decreased," she said.