Boosting our social safety net programme
There needs to be a strong framework, along with implementation strategy, which will make it easier not only to find out potential beneficiaries but also to reduce the leakages, miss-targeting, misallocations of funds that have been considered a major drawback to poverty eradication in days past
The social safety net is a measure taken by the government to support poor and ultra-poor families, directly and indirectly, to help them survive and get out of the cycle of poverty.
Over the years the coverage of SSNPs that played a redistributive and productive role has increased and improved the living standards of the beneficiaries.
Undeniably, the country has made impressive development towards poverty reduction in the last few years (Hasan & Khan.Trisa, 2016).
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According to BBS, in FY 2019-20, the poverty rate stood at 20.5 percent, while the extreme poverty rate was 10.5 percent. It was as high as 85 percent in in 1971. (Choudhury & Ali, 2012).
The fall in the poverty rate can be attributed to the impressive economic development in terms of GDP growth (on an average 6 percent over the last one decade) and per capita income, participation of women in the labour force, opening up of international labour market for Bangladeshi unskilled and semi-skilled workers, rise in manufacturing job opportunities, installation of various skills development programmes funded by the government and private institutions and the increasing allocation of fund towards the SSNP (Rahman, 2012).
The government had prioritised the poverty eradication programme in its 7th five-year plan and is set to lower the upper poverty rate to 18.6 percent by 2020, which was 24.3 percent in 2016 (Khatun & Saadat, 2018).
While the government, NGOs and other affiliated bodies were struggling to lower the poverty rate to 18.6 percent, the widespread outbreak of the highly contagious virus (Covid-19) that devastatingly affected the economic activities all around the world, left the government in a dire situation with regards to bringing down the poverty rate along its target.
The International Monetary Fund reported that the world's GDP growth rate would decline to negative and Bangladesh's growth rate will be 2-3 percent, which was 8.15 % in the last fiscal year.
The Asian Development Bank predicted that around 15 million people in Bangladesh will fall under the poverty line and the GDP growth rate will be reduced to 4 percent.
Roughly, 85.1 percent of the people are a part of the informal economy where employers do not have contractual obligations to provide salaries (Ahamed, Sandhu, & Saioivici, 2019).
Economists have opined that a prolonged lockdown and prospects of dismal economic future might aggravate the youth unemployment rate and push hundreds of thousands of people below the poverty line in the short to medium term.
Thus, to tackle the breakdown of the economic and social structure, the government has to act very prudently from policy formulation to implementation. Historically, the government has been confronting poverty from two dimensions i.e. income poverty and human poverty. A number of measures, both direct and indirect, have been used to support the needy(Ahmed et al., 2019). Various income and employment generating projects/programmes, conditional and unconditional cash transfer to certain group of people are considered direct ways to reduce income poverty. On the other hand, investment in education, health and nutrition and sanitation sectors is an indirect formof mitigating the human poverty. In safety net schemes, Old Age Allowance, Widowed and Distressed Women Allowance, Disabled Allowance are viewed as unconditional cash transfer whereas Primary Education Stipend Programme (formerly Food-for-Education) Stipends for Female Secondary Students are regarded as conditional cash transfer(Khan, Ashiq, & Tahsina, 2008).
There is no universally accepted program designed to curb poverty; it depends on the structure of economy, target group and objectives of the program. Ironically, the social safety program has been plagued by leakages, corruption, miss-targeting, misallocations of funds, political influence etc. It is pertinent to have a look at the budgetary allocation of social safety net program (Rahman, 2012).
In recent years, budgetary allocation to SSNP has been increased from 16 percent to 17 percent. It stood at 17 percent of the total budget expenditure and approximately 3% of GDP, amounting to BDT 955,740 million in FY 2020-21.
Studies found that though the allocation increased from 2010 to 2017 period, its share of total GDP and budget is unfortunately declining (Khatun & Saadat, 2018).
The higher budgetary allocation also did not bring much good to the marginal classes of people as the increased amount went to the government's pension earners and monthly allowances of freedom fighters.
Now let's come to some suggestions:
Firstly, there needs to be a strong framework, along with implementation strategy, which will make it easier not only to find out potential beneficiaries but also to reduce the leakages, miss-targeting, misallocations of funds that have been considered a major drawback to poverty eradication in days past.
To combat the aftermath of the Covid-19 situation, resource allocation to the SSNPs has to be increased to 5 percent of GDP (and 20 percent of total budgetary allocation in the upcoming budget 2020-2021 sessions.)
As the economic recession created both demand side and supply-side shocks, the authorities should send a minimum of BDT 24,000 (8,000 per month) to the 19 million poor marginal households as an immediate response that will boost the consumption.
As Conditional Cash transfer program is one of the most successful safety net programmes in many countries (Latin America and Africa), a higher allocation should be made for CCTs through to be distributed through mobile financial accounts that will act as the prime catalyst to women empowerment and creation of human capital.
Make provisions for educated and uneducated unemployed youth for allowance and training facilities so that we capitalize the demographic dividend after the shocks.
The National Rural Employment Guarantee Act (NREGA) is recognised as the most successful scheme worldwide. We should launch an Employment Generating Program (EGP) in more disaster-prone areas like Rangpur, Kushtia to prevent poverty and to ensure the transmission of wealth to the extreme poor.
Leveraging financial technologies (MFS and Agent Banking) to provide conditional cash transfer to vulnerable groups will ensure more freedom of choice in buying decisions and avert fraudulence in the allocation of the fund.
There should be more allocation to the education and healthcare sector by creating more fiscal space, by increasing tax-GDP ratio, reprioritisation and better rationalisation of public expenditure.
