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Budget raises social spending as economists call for more

MIR MOSTAFIZUR RAHAMAN | June 07, 2024 00:00:00

The proposed budget for FY 2024-25 allocates Tk 1360.26 billion to social safety net programmes, up from Tk 1262.72 billion in FY24. However, economists say this increase is not enough to provide relief to the poor given the high inflation dragging on for more than two years.

"This is not adequate at all," said Dr Fahmida Khatun, executive director of the Centre for the Policy Dialogue (CPD).

Dr Fahmida Khatun said inflation has already eroded people's purchasing power, leaving them with little disposable income.

On the other hand, the social safety net allocation usually includes pensions for government employees, agricultural subsidies and infrastructure for other beneficiary groups, she told The Financial Express.

"Considering all these factors, I think this allocation is simply not enough," the economist added.

Economist Dr Mohammad Abdur Razzaque, Chairman of RAPID, echoed Dr Khatun's arguments, saying that the proposed allocation is inadequate in light of high inflation.

He said it is important how the additional Tk 91.54 billion is distributed in the budget. "If it goes to sectors like pensions and logistics, then the poorest people will not benefit much," Dr Razzaque observed.

He suggested a huge allocation for the Open Market Sale (OMS) programme in urban areas, where low-income and lower-middle-income groups are largely vulnerable to food inflation.

"Food inflation is currently above 10 per cent," Dr Razzaque reminded.

In his budget speech, Finance Minister Abul Hassan Mahmood Ali underscored a proposed increase in allocations and beneficiary numbers.

"Substantial progress is being observed in poverty alleviation, employment and other sectors as a result of multi-pronged poverty alleviation interventions," the minister said.

"The most notable example is that the poverty rate has declined from 31.5 per cent in 2010 to 18.7 percent in 2022, and extreme poverty has fallen from 17.6 per cent to 5.6 per cent during the same period."

The minister gave a summary of several expansions planned for social safety net programmes.

Out of 115 such programmes, 34 are cash-based. Currently, 19 of these programmes disburse funds directly to beneficiaries' bank accounts or mobile wallets through the G2P system.

"Over 93 per cent of the benefits from cash-based social safety net programmes are now paid through the G2P system," the minister said. "The remaining cash-based programmes will be brought under this system in the next fiscal year."

Regarding support for people with disabilities, he said the number of disability allowance recipients will increase from the current 2.9 million to 3.23 million in the next financial year.

Besides, the stipend for students with disabilities at the higher secondary level will rise from Tk 950 to Tk 1,050.

The minister also discussed the expansion of the 'Mother and Child Support Programme' launched under the National Social Security Strategy. Beneficiaries receive Tk 800 per month for up to 36 months under this programme.

The programme will be expanded, increasing the number of beneficiaries from 1,504,800 to 1,655,280 in the next fiscal year, he added.

On protecting elderly people, widows and abandoned women, the minister said an allocation of Tk 42.6 billion was made in FY 2023-24 to provide a monthly allowance of Tk 600 to 5.801 million senior citizens.

The number of beneficiaries will increase to over 6 million in the upcoming fiscal year, with an allocation of Tk 43.51 billion budgeted for their allowances, according to the finance minister.

Moreover, the government has decided to increase the number of widows and abandoned women receiving allowances from 2.576 million to 2.775 million. An allowance of Tk 18.44 billion will be allocated in the budget for this purpose, the minister told the House.

He reaffirmed the government's commitment to safeguarding socially marginalised groups, including the Bede and Hijra communities.

The finance minister provided details on support programmes for marginalised communities and freedom fighters.

"Currently, 6,880 individuals from the Hijra community receive allowances to improve their living standards," he said. "We plan to expand this programme to cover a total of 12,629 people in the next fiscal year. Allowances for the Bede community will also continue."

In the upcoming fiscal year, some 9,832 individuals from other socially disadvantaged groups will be included in the allowance programme.

Regarding support for freedom fighters, the minister announced that the monthly honorarium for all categories has been increased to a minimum of Tk 20,000, considering their socio-economic circumstances.

"We are providing grants for freedom fighters' honorariums, including festival allowances for Eid, Pahela Boishakh and Victory Day, for the surviving freedom fighters," he added.

Additionally, the 'Housing Construction Project for Insolvent Freedom Fighters' is underway to provide free housing, called 'Bir Nibas', to 30,000 deserving freedom fighters at a cost of Tk 60.97 billion, the minister said.

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