Govt to adjust six safety net schemes with inflation

The finance ministry has decided to review six cash-based social safety net programmes at least once a year to ensure that the benefits remain adjusted for inflation.

According to a circular issued by the ministry around the middle of the current month, the Consumer Price Index will be used as the benchmark economic indicator for reviewing the benefits under these programmes.

Based on the review findings, recommendations will be provided to the related advisory committee or ministerial committee through the finance secretary.

The six programmes are old age allowance, allowance for widows and deserted women, disability allowance and education stipend, underprivileged people's livelihood development, benefits for mother and child, and employment generation for the poorest.

The circular said a working committee headed by an additional secretary of Macroeconomic Wing-1 of the Finance Division would be formed to conduct the review.

Representatives from the Cabinet Division, General Economics Division, and Bangladesh Bureau of Statistics will be included in the committee.

A ministry official stated that if the review finds the allowances to be lower than the inflation-adjusted benchmark, recommendations will be placed before the Cabinet Division for an increase.

For the current fiscal year, the number of social safety net programmes has been trimmed to 95. Previously, there were 140. The government allocated Tk 126,731 crore for the programmes, which is 16.04 percent of the total budget.

Last fiscal year, the total allocation for social safety net programmes was Tk 136,026 crore, which was 17.07 percent of the total budget.

In Bangladesh, the social security system is a vital tool for poverty alleviation and protecting vulnerable households from economic shocks, health crises, and lifecycle risks.

However, per person allowance is still small compared to their needs. So, there is a huge demand from people to increase allowances and reduce inclusion and exclusion errors.

The government kept the highest budget allocation of Tk 4,791 crore for the old age allowance programme for the current year to enhance the financial security and social status of the elderly poor.

The second-highest budget allocation of Tk 3,845 crore was kept for the disability allowance and education stipend programme.

In the current fiscal year, the government tried to streamline the social safety net programmes. It has already planned to adjust the benefits for inflation, which has been on a rising trend over the last couple of years.

Inflation in August eased slightly to 8.29 percent, down from 8.55 percent in July, according to the latest data from the Bangladesh Bureau of Statistics.

It was above 9 percent in the preceding 27 months until last June.