Increase per capita safety net allocation in budget, economist asks

The government should increase the per capita allocation under its Social Safety Net Programs (SSNP), especially for the elderly, widows, disabled and marginalized women, given the high food inflation and rising in the cost of living, said an economist.

“It is admirable that the government has extended the coverage of the social safety net. The per capita allowance should also be increased taking into account the rise in inflation,” said Sayema ​​Haque Bidisha, a professor in the department of economics from the University of Dhaka, during a telephone interview. recently.

“If we don’t increase the allowance, it won’t work properly. The allowance for SSNP should be guided and linked by the government’s national social security strategy.”

The government introduced an allowance at the rate of Tka 100 per person in FY 1997-98 and increased it to Tka 500 in FY 2017. Persons with disabilities receive Tk 750 each.

The economist suggested separating the government employee pension plan from the safety net programs.

Indeed, although the government has increased the safety net allocation by 12% to Tk 1,07,614 crore in the current financial year compared to a year ago, a large portion is used as expenditure for retirement.

“That means the actual allocation for the poor is much lower,” she said.

The allocation of the safety net represents 17.83% of the budget and 3.11% of the gross domestic product, according to data from the Ministry of Finance.

But Taka 26,690 crore has been set aside as pensions for retired government employees and their families for FY22, which is more than a quarter of the allocation.

She recommended that the government make slum dwellers benefit from social safety net programs.

Professor Bidisha, also research director of the South Asian Network on Economic Modeling, an independent think tank, suggested the government take steps to document all transactions and tag them with the taxpayer identification number (e-TIN). ), with a view to increasing revenue collection.

“Year after year, many transactions have remained undocumented and not subject to direct taxation. In order to ensure better tax collection, all transactions must be documented and labeled with e-TINs. We must fundamentally reform the income tax structure.

Tax collection as a percentage of GDP is stuck at around 7.6% in Bangladesh, the lowest in South Asia, one of the lowest in the world and the lowest among lower-middle-income countries .

The next budget should aim to significantly increase investment in the health and education sectors, Prof Bidisha said.

“Investment in the education sector should be centered on young people and targeted at quality educational programs.”

Apart from increasing the size of the budget, the government must ensure the efficiency of the budget, she said.

As a labor economist, she recommended prioritizing labor-intensive industries to generate more jobs since the pandemic has hurt the labor market.

“Safety net programs should be planned and focused on the overall goal of job creation for those at the bottom of the distribution.”

She called for an increase in the allowance for small and medium enterprises and women entrepreneurs.

“We must set our goal of reducing poverty and inequality. Our main objective must be to ensure inclusive growth and development.”

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