The gaping hole in our social safety nets exposed

The economic and social shutdowns caused by Covid-19 is testing Bangladesh's social safety nets as not many people are having a real and quality access to it right now.  

The global health crisis has hit Bangladesh's economy hard and imperilled the country's impressive achievements in poverty reduction. 

In the coming weeks and months, many more Bangladeshis will be forced to turn to the social safety nets for help.

Covid-19 makes a powerful case for boosting our social safety net. But the proposed budgetary allocation is no match for the current rate of vulnerability and poverty.

Although the allocation for social safety net programmes has improved, things have changed little for the poor and vulnerable people who need it most. 

The extremely poor and low-paid workers of the informal sector with the sudden loss of their source of earning have fallen through the cracks.

A large chunk of the allocation is going to the rich.

The World Bank projected that the extreme poverty rate in Bangladesh would increase from 12.8 percent last year to 21.8 percent in 2020. 

Another 15.17 million extremely poor would join the already existing 21.58 million in the country. 

Finance Minister AHM Mustafa Kamal yesterday proposed social safety net programmes worth Tk95,574 crore for the next fiscal year, adding 13,709 crore or 16.75 percent to the revised budget of the current fiscal year.

Allocation for the programmes will exceed 3.01 percent of the country's gross domestic product (GDP) for the first time.

The proposed programmes added 8.76 lakh to the revised budget of the fiscal year and are supposed to benefit 107.26 lakh people.

However, the programmes will include TK23,000 crore, 24.07 percent of the total allocation, for the pension of only 6.3 lakh government employees.

Analyzing the proposed social safety net schemes, it has been found that Tk10,000 crore has been allocated for interest subsidy, interest exemption, refinancing scheme for farmers and employment generation programmes of government banks.

But these should not have been included in the social safety programmes, said the economists.  

Meanwhile, a study of the World Bank said, "The old age allowance helped to raise the purchasing power of the poorest 10 percent families by 30 percent and food consumption by 70 percent in the recipient families."

The senior citizens and widows have been receiving allowances under the government's social safety net programmes for almost eight years. 

The allowance rose from Tk100 to Tk500 in 2017. But it did not change after that.

But they expected extra allowance this time as their other income took a Covid-19 hit. 

However, the amount of allowance has remained unchanged in the proposed budget for the next fiscal year, disappointing about 74 lakh recipients like them.

The beneficiaries of old age allowance will increase to 49 lakh, including 5 lakh poor senior citizens in 100 upazilas – most prone to poverty due to the Covid-19 outbreak.

Allocation for this purpose will be Tk2,940 crore – an increase of Tk300 crore.

All widows and women deserted by their husbands in 100 upazilas, most prone to poverty due to Covid-19 outbreak, will be brought under the coverage of the allowance programmes for them as per the existing policy, said the finance minister. 

"This will add 3 lakh 50 thousand new beneficiaries, and an extra allocation of Tk210 crore."

The number of beneficiaries of the allowance for insolvent persons with disabilities will be increased to 18 lakh, adding 2.55 lakh new beneficiaries.

However, on average a person needed Tk1,862 every month to maintain a minimum standard of living in 2016 as per the lower poverty line survey of the Bangladesh Bureau of Statistics.

Now the amount has risen to Tk2,000 due to inflation. 

Tk500 is not sufficient for a person to survive, according to economists. They said, more than 5 crore labourers in the informal sector lost their earnings due to Covid-19. 

About 5.4 crore of extremely poor are now at high risk, showed a recent study of Brac. "At least 1 member in 74 percent of families lost job."

Another study of the Brac Institute of Governance and Development (BIGD) said, "About 71 percent of poor people lost their job during Covid-19 pandemic. Income fell by 50-90 percent for people who remain employed. Even, 27 percent of people are unable to manage a meal three times a day now."

So the experts recommended a cash support programme to provide, Tk8,000 each, to help 2 crore families survive, taking the total to Tk96000 crore – about 3.8 percent of GDP –  at a webinar of the General Economics Division and the BIGD.

But the finance minister proposed safety net programmes for just a few of the many who need it most.

Also, there are some irregularities in beneficiary identification, allowance transfer activities due to lack of transparency and accountability, the World Bank report said.

"About 18.20 percent of the allowance was spent on treatment and some people also created alternative income using the allowance."

The Centre for Policy Dialogue Executive Director Dr Fahmida Khatun told The Business Standard, "Tk500-750 is not enough for a person to survive for a month. The government should allocate at least Tk2,000 for each member of poor families."

"Covid-19 has destroyed earning source of at least 2 crore families. There needs to be an allocation of 4 percent of GDP to implement social safety net programmes for the poor people while sidestepping allocation for pension."

"It is not wise to integrate pension, interest subsidy, interest exemption, refinancing schemes into the social safety net. They make a big part of social safety net programmes now."  

"The rich should not be financed under the social safety net."

However, the proposed programmes included Tk3,000 crore as interest subsidy for the small industry and services and Tk2,000 crore as support to interest exemption of commercial banks due to impact of Covid-19.

Another Tk3,000 crore will be allocated in social safety net programmes for the refinancing scheme of farmers and small business. 

The government will finance the job creation programmes of Palli Sanchay Bank and Karmasnsthan Bank under the scheme.

In 2015, the government announced a National Social Security Strategy to ensure a more comprehensive social protection system for its population. 

Following the strategy, it was supposed to make a reliable list of beneficiaries to ensure the best use of its allocation. However, there had not been much progress in this direction.

Dr Sayema Haque Bidisha, professor of economics at the University of Dhaka told the Business Standard, "The government should increase allocation for the poor people for their survival. The budget has no reflection on it."

"The urban poor have been more affected by Covid-19. The government should increase allocation for the poor in urban areas."