Poverty rate 19%, safety net coverage 34%. Who are the extras?

Unveiling a surprising trend, a recent Planning Commission report shows a surge in social safety net beneficiaries. It shows nearly double the number of people living below the poverty line are now receiving aid, sparking concern among policymakers about the programme's efficiency.

Allowances given under social safety programmes are intended for those in financial hardship, but policymakers suspect unintended participants might be diverting resources away from the truly vulnerable population.

The report also found a bias in beneficiary selection at the grassroots level alongside instances of corruption leading to the misallocation of funds.

"The beneficiary coverage ranges between 32% and 34% of the total population, surpassing the poverty rate of 18.7%," said the final draft report of the "Social Security Sector Action Plan" prepared by the Socio-Economic Infrastructure Division of the Planning Commission.

"While this suggests comprehensive coverage for impoverished and vulnerable groups, there are instances of both wrongful exclusions and inclusions. Accounting for these discrepancies reduces the inclusion of genuinely struggling individuals," it said.

According to the latest estimates of the Bangladesh Bureau of Statistics, roughly 3.17 crore people in the country, constituting 18.7% of the total 16.98 crore population, live below the poverty line.

In reality, around half of social security beneficiaries are poor, while the other half are wealthy.

Mahbub Ahmed, former senior secretary, Finance Division

A stark urban-rural divide was also observed in safety net programme access. Only 50% of the urban poor have coverage and the rural poor see a 150% coverage rate.

The commission recommended prioritising the expansion of social programmes targeting the urban poor.

The report, seen by TBS, said many intended recipients of social security programmes do not receive their due benefits while some ineligible individuals receive government allowances which could compromise the government's poverty reduction efforts.

In the report, sent to various ministries last month, the commission has urged the government to address shortcomings in social security management over the next five years.

Linking financial and other information with NID cards would streamline the process of identifying eligible beneficiaries of safety programmes.

Binayak Sen, DG BIDS

Experts also acknowledged the significant challenge of accurately identifying deserving beneficiaries.

Binayak Sen, director general of the Bangladesh Institute of Development Studies (BIDS), told TBS that there is currently no established mechanism for accurately selecting beneficiaries and updating lists.

"The prime minister had instructed officials to compile a list of 50 lakh impoverished individuals for providing cash assistance during the pandemic, but 30% of the listed recipients were found to be fraudulent. This illustrates the difficulty in effectively targeting the social safety net," he said.

Binayak Sen said many impoverished individuals are excluded from social security benefits, especially the urban poor. He called for a distinct programme to address their needs.

The current fiscal year's budget allocates Tk1,26,272 crore for social security, constituting 16.58% of the total budget and 2.52% of the country's GDP. The commission suggests raising the allocation to 3% of GDP.

In the report, the Planning Commission said, "While budgetary allocations remain consistent, they are inadequate and the individual assistance offered is insignificant."

Beneficiary selection problem

The report found that chairmen and members of the Union Parishads, tasked with selecting beneficiaries, often consider the political affiliations and family ties of potential voters when compiling the beneficiary list. This practice frequently leads to eligible individuals being excluded.

Additionally, corruption at the grassroots level often results in the misappropriation of funds earmarked for social protection initiatives.

The commission also highlighted disparities in allowance distribution, specifically in the Ministry of Social Welfare's programme for widows and destitute women. Despite approximately 26 lakh beneficiaries, 130,000 distressed women are excluded.

The commission recommends their inclusion and expresses concerns about insufficient programmes for orphans and disadvantaged children.

The commission also proposed extending old age allowance coverage to all individuals aged 60 and above, advocating for an increase in the number of beneficiaries. Currently, eligibility for old age allowance starts at 65 for men and 62 for women.

Additionally, the commission highlighted the necessity of introducing special facilities for individuals aged 90 and above.

In the current fiscal year's budget, 29 lakh disabled persons receive an allowance. The commission recommends including all disabled individuals under this allowance scheme.

Experts call for transparency in beneficiary selection

Former senior finance secretary Mahbub Ahmed told TBS, "In reality, around half of social security beneficiaries are poor, while the other half are wealthy."

"Beneficiaries are often chosen through Union Parishad and Municipal officials, favouring those who support them through voting. Consequently, impoverished individuals not aligned with these representatives miss out on benefits," he said.

Ahmed noted government employees' involvement and suggested upazila nirbahi officers (UNOs) should scrutinise beneficiary lists, but due to close ties between UNOs and local politicians, lists often go unchecked.

Stressing the importance of annual list scrutiny, Ahmed emphasised achieving at least 70-80% authenticity, warning of social security investment failure without transparency.

Binayak Sen said, "As of now, Union Parishad or municipal representatives are tasked with determining beneficiaries, considering the impracticality of creating lists by others."

Highlighting India's implementation of the Aadhaar card, which is linked to the National Identification (NID) card, Sen said the Aadhaar card includes extensive information, such as the individual's bank account number. India conducts regular poverty censuses to identify those below the poverty line. The Aadhaar card also indicates whether the person is below the poverty line.

"Linking financial and other information with NID cards would streamline the process of identifying eligible beneficiaries of safety programmes," he added.

How to solve the beneficiary problem

Stressing the importance of introducing Management Information Systems (MIS) to accurately identify beneficiaries in social security, the report emphasises the annual verification of beneficiary lists. It suggests excluding those who are financially well-off and ensuring the inclusion of the needy.

Furthermore, the report notes the absence of a formal performance evaluation system for social security programs and recommends evaluating and monitoring programmes based on their outcomes.

On 21 December last year, the 18th meeting of the "Central Management Committee on Social Security Programme," led by Mahbub Hossain, secretary of the Cabinet Division, discussed the establishment of MIS for beneficiaries, with a decision made to replace those who have surpassed the poverty line with new recipients.

FY24 allocation for social safety

Of the total allocation of Tk1,26,272 crore, Tk43,389 crore has been given to provide allowances to 13,864,000 individuals, including the elderly, widows, pensioners, freedom fighters, Bedes, Hijras, and other communities.

Among this amount, Tk27,413.78 crores have been earmarked for 800,000 non-cadre government employee pensioners, meaning only 5.77% of the beneficiaries are receiving 63.18% of the allocation.

Additionally, Tk5,176.71 crore has been designated for allowances for 219,000 freedom fighters. This means that 1.58% of the beneficiaries in the cash distribution sector are receiving 11.93% of the allocation.

The selection of beneficiaries for various programmes, including old age allowance, widow allowance, mother and child benefit programme, as well as support for the disabled people, Hijra, and Bede community, involves the chairmen and members of the Union Parishads, along with the ward mayor and ward councillors of the municipalities. The total number of beneficiaries under these programmes amounts to 1,24,45,000.

The government provides rice and wheat through the social safety net to mitigate hunger among the impoverished. For the current fiscal year, Tk16,814 crore has been allocated under the Food Security and Employment Generation Programme.

Approximately 3.68 crore people are beneficiaries of this programme. Among them, beneficiaries from the Vulnerable Women Benefit Programme, Vulnerable Group Feeding, GR, and Food Assistance in Ctg-HTA amount to 2.31 crore. These beneficiaries are selected by local public representatives.

In addition to cash allowances and food assistance programmes, the remaining portion of the social security budget is utilised for various government schemes, including student stipends, which may not target genuinely impoverished individuals.

The government subsidised loan interest for small and medium-sized industry owners, with the Ministry of Finance allocating subsidy funds under social security. In the current financial year, Tk 5,000 crore has been allocated for interest subsidies on loans for 3,000 businessmen.

Similarly, the government has earmarked Tk21,700 crore in the current fiscal year's budget to subsidise loans for 2.13 crore farmers, which is categorised as social security expenditure.

However, the government has not yet verified whether those enrolled in various social safety net programmes genuinely qualify as impoverished. Once included in these lists, beneficiaries continue to receive benefits annually.