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Towards a welfare model

| Updated: October 12, 2020 20:21:49

Towards a welfare model

Safety net programmes in Bangladesh have evolved from the past and have been gradually expanded covering more beneficiaries over the years. During British rule, these were known as Test Relief (TR) and Gratuitous Relief (GR), applied at times of socio-economic emergencies caused by natural calamities like flood, cyclone etc. These relief measures continued in the same fashion during the Pakistan period. In the early years of independent Bangladesh, these were supplemented by Vulnerable Group Feeding Programme, Vulnerable Group Development  and other targeted programmes for the poor. During the past two decades the relief oriented programmes have been supplemented and expanded with a slew of social protection programme for the old, disadvantaged, handicapped, widows and divorced women.  To consolidate and to place all the programmes with social safety net orientation, a national Social Safety Net Programme Policy (SSNPP) was formulated in 2015. Since then both the number of these programmes and their coverage have increased from year to year. The amount spent on these programmes amounted to 2 per cent of GDP in 2010 and rose to 3 per cent during fiscal 2015. The budget for the year 2020-2021 has proposed Tk. 955.74 billion to be allocated to the sector as against Tk. 818.55 billion during the outgoing fiscal. The present allocation amounts to 16.83 per cent of the budget and 3.4 per cent of GDP. Among the new programmes in the present budget, social safety net for senior citizens in 100 upazillas will be covered and given old age pension at the prevailing rate. This will add 0.5 million new beneficiaries, claiming an additional allocation of Tk. 3 billion. They will be selected from among those affected by Covid-19. Widows and women deserted by their husbands in 100 upazillas, numbering 0.35 million, will also be given allowance as Covid affected persons. The number of beneficiaries of allowances for insolvent persons with disabilities will be increased to 1.8 million following the latest disability identification system, adding 0.25 million new beneficiaries who will claim an additional allocation of Tk. 2.29 billion. In addition to all the allocations for SSNP, the budget for FY 21 has allocated Tk. 1 billion for Rural Social Services Programme to take care of adverse effects of Covid-19. Earlier, the government allocated Tk. 25.0 billion for 0.5 million families who lost their income because of the pandemic.

The brief review above shows that the SSNP is increasing both in terms of coverage of different groups of poor and disadvantaged groups and in terms of allocations made for their assistance from year to year. In the absence of a comprehensive survey (the new household survey by BBS is yet to be completed), the number of poor and handicapped covered under the various SSNPs cannot be said to be comprehensive. More importantly, the programmes for covid affected people and the allocations made for them in the current budget cannot be said to cover all those who have become affected. So, the first and foremost task in respect of SSNP is to complete the preparation of the household survey and come up with a list of the targeted beneficiaries.

Since much confusion has arisen because of lumping together of poverty focused programmes and SSNPs, it is necessary to make a distinction between the two. Poverty focused programmes mainly aim at alleviating poverty by helping the poor with funds, training and marketing to become productive so that they can graduate out of poverty. The bulk of SSNPs, on the other hand, is given for subsistence allowance to the poor beneficiaries which may not lead to their productivity increase. Being mostly old, disadvantaged and handicapped, the beneficiaries of SSNPs are not able to be engaged in productive activities. So, the SSNPs are essentially separate from poverty focused programmes. Another way of looking at SSNPs is to consider these as programmes of redistribution of national income while poverty focused programmes add to the growth of national income that also benefit the poor. Because of these implications in terms of redistribution of income, it will be more accurate to describe them as welfare programme. A welfare programme has components that meet the requirements of basic needs like food, health, shelter, education etc. The amount provided to the beneficiaries of a welfare programme should cover all these basic needs.

The poor who are being helped with credit for productive purposes to alleviate poverty also need the provision of food, health, education, shelter etc., at a cost that they can afford. The poverty focused programmes do not provide for meeting the basic needs directly and focus on enabling the poor in undertaking income generating activities for which credit is given. But for the majority of the poor under the poverty focused programmes, it is not possible to afford all the basic need items except food at affordable prices. Therefore, for the poor under poverty-focussed programme and the beneficiaries of SSNPs, it is necessary to have a common welfare programme that will address their basic needs. For this purpose, a welfare model has to be prepared that will take care of the basic needs of the poor, low income, and disadvantaged groups. Since this is involved with redistribution of national income, everyone below the cut off income level i.e., the basic needs income (BNI) should be eligible for assistance in cash or kind from the government under the welfare programme.

Among the basic needs the provision of food should be given top priority. A nationwide food rationing system should be introduced for those adults having income below the BNI. A national survey of every household should determine who are eligible for subsidised food under the public rationing system. The old and disadvantaged will continue to have their allowances under SSNPs and the food given under rationing should be available to them on payment. The poor who are engaged in wage employment or are self-employed will also be eligible for food ration. Next to food, health services and healthcare should be an important component in the welfare model. All those having income below BNI, whether or not they belong to poverty focussed programmes, will be eligible for free healthcare services. Those above the BNI, however, will have to pay for different health services at subsidised rate to be determine by the government from time to time. In other words, health service under the welfare model will be free only for those having income below BNI and those who are covered by SSNPs. For others, health service and care will be available at subsidised rates that may vary according to their income. Likewise education up to SSC level should be free for those who have income below BNI. For others education will be available on payment of nominal charges determined by the government. Higher education, like primary and tertiary ones, will also be available at subsidised costs. The whole philosophy behind the welfare programme is to treat food, health, education as `public goods' which should not be made into `commodities' available in the market at prices determined by supply and demand. As regards housing and shelter, another component of the welfare model, loan at no interest rate will be made available to those below BNI and at reasonable rates of interest to those having income above BNI.

The above is a rough and tentative outline of a welfare programme that should supplement the poverty focused programmes and the SSNPs. It will cut across the target groups under both the programmes making all of them beneficiaries of free/subsidised items of welfare. The practical aspect of the welfare programme will be that it will be based on the principle of BNI and will use a national household survey to select the beneficiaries.

The rationale behind the welfare programme are the following.

  1. a) inequality of income is increasing rapidly as the GDP has climbed on a upward path;
  2. b) the SSNPs are expanding, covering more poor and disadvantaged people but without provision of basic needs like health or food at low price;
  3. c) the beneficiaries of poverty focused programmes cannot afford to pay for health, education and other basic needs with their income;
  4. d) the need for food is a basic right of people, particularly the poor and the low income group, as such food should be available at subsidised price;
  5. e) health and education, being public goods, should be available free for the extreme poor and at subsidised prices for those having regular income above BNI.

The question that may be raised by the sceptics is over the mode of financing the welfare programmes including the SSNPs. The major part of financing will obviously come from the national exchequer. For this, the income tax on the rich and the corporate tax on business and industries should be utilised. Every citizen of the country, including beggars,  will contribute to a national insurance scheme  which will be a condition for their eligibility to receive the welfare benefits. Every citizen will be required to have a national insurance card which will be very much like the NID card or may replace the NID as it will have more information (annual income, family members etc.) than the latter. The card holders will be required to have e-accounts like bKash, Rocket etc., so that payment of financial assistance can be made to the beneficiaries of various SSNPs and other emergency programmes for relief that may be taken up in future. Only the very old, handicapped and disadvantaged people will have free access to cash relief to buy food and health services and care.

Why the proposal is being made now for a welfare model? The answer is because of the yawning gap in the present programmes under SSNPs as has been exposed after the corona virus outbreak that left hundreds of thousands without employment and income and outside the SNPPs. The second reason why a welfare model is needed now is because of the alarming speed at which inequality is increasing for quite sometime. Unless a systematic redistribution of income is designed and implemented with revenue earnings of the government financed out of taxation on the rich and wealthy, inequality will go on increasing making it difficult to tackle. Finally, past experiences with food rationing for the low income people and the poor and the experience of more than a decade of implementing various SSNPs provide a solid ground for undertaking an ambitious programme for promotion of welfare. It will start on a modest scale and gradually expand its scope and expenditures. During all the stages attempts will be made to make the programme participatory with as much contributions from the beneficiaries as is reasonable.        


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