FY24 Budget: Inflation to determine social safety budget
Allocation likely to be 15pc more
The government is set to increase the amount of allowance under the social safety net programme in the next budget to cushion the poor from the impacts of high inflation.
Inflation averaged 8.74 percent in the first eight months of the fiscal year, way above the budgetary target of 5.6 percent, according to data from the Bangladesh Bureau of Statistics.
"If inflation shoots up by 5 percentage points, we will increase the allowance by the same proportion," Finance Minister AHM Mustafa Kamal told The Daily Star yesterday.
The amount of allowance is likely to be increased by Tk 50 to Tk 100 in different safety net programmes, as per a decision taken at the meeting of the cabinet committee on social safety presided over by Kamal.
The global economy has been impacted by the Ukraine war.
"We are struggling to move forward amid this crisis period," Kamal said.
The government has targeted to broaden its safety net programme to cover about 8 lakh people under three programmes: old age allowance, allowance for widowed, deserted and destitute women and allowance for the financially insolvent disabled.
"If inflation shoots up by 5 percentage points, we will increase the allowance by the same proportion,"
"Different ministries have made demands and we are addressing those with our limited resources," he said.
Subsequently, the allocation for the social safety net programme will increase by about 15 percent to Tk 1.3 lakh crore in the upcoming budget.
The social safety net budget also includes pensions for retired government employees and their families. This took up about 25 percent of this year's social safety budget of Tk 1.13 lakh crore.
Subsequently, the International Monetary Fund has called for excluding the pension scheme from the social safety budget as part of its $4.7 billion loan programme.
Social safety net programme is meant for the poor people only, it said.
In that vein, the government is planning to increase the old age allowance by Tk 100 to Tk 600 in the incoming fiscal year.
At the same time, the government plans to increase the number of beneficiaries by one lakh to about 58 lakhs although the social welfare ministry has sought to expand the beneficiary count by 12 lakh. This will cost the government an additional Tk 761.42 crore, so the allocation for this programme will increase to Tk 4,305 crore.
The allowance for widowed, deserted and destitute women is proposed to increase by Tk 50 to Tk 550.
The finance division has recommended increasing the number of beneficiaries by one lakh to 25.75 lakh though the Social Welfare Ministry pushed to increase the tally by 6.9 lakh.
The government will have to spend Tk 216 crore more. The allocation for this programme in fiscal 2023-24 is likely to be Tk 1,711.4 crore.
The number of disabled persons to get government handouts will increase by 5.35 lakh to 29 lakh.
Though the total amount of allowance is increased to Tk 2,978 crore from Tk 2,429 crore, the beneficiaries will receive the allowance at the current rate as the additional allocation will be spent for the extended coverage.
Right now, disabled persons get Tk 850 per month.
The social welfare ministry proposed to increase the allowance by Tk 1,000 crore.
No change is brought to the stipend for disabled students. The social welfare ministry proposed to increase the amount by Tk 300.
Finance ministry officials said decisions were not made on all programmes including those for freedom fighters and for improving the livelihoods of transgender, bede and disadvantaged community.
Besides the allowances, the government will spend more on open market sales and various employment generation programmes.
The government plans to increase allocation by Tk 5,000 to Tk 24,600 crore in the next fiscal for employment generation programmes.