FY18-19 budget: What's in it for the poorest people?

Mustafa K. Mujeri | Published: June 20, 2018 22:11:50 | Updated: June 22, 2018 21:48:26

- Focus Bangla file photo

For Bangladesh-with relatively high levels of poverty and inequality--it is reasonable to assess the budgetary allocations from a pro-poor perspective. About 24 per cent or nearly 40 million of the country's population live below the poverty line. Over the period of 1963-2016, national Gini of income distribution has risen from 0.36 to 0.483-an increase by more than 34 per cent-while rural Gini increased by nearly 38 per cent and urban Gini by 21 per cent over the same period. Overall inequality increased rather sharply in the rural areas while urban areas experienced somewhat moderate rise in income inequality.  Although Bangladesh is richer than ever before today, still the richest 5.0 per cent of the households receive nearly 28 per cent of the total income, while the bottom 5.0 per cent get only 0.23 per cent.

Available data on income shares of the poorest 40 per cent, middle 50 per cent and the richest 10 per cent in the income distribution at the national level show that the share of the middle 50 per cent is relatively stable; while the poorest 40 per cent generally lose in terms of income share while the richest 10 per cent gain. The situation is worse in the rural areas as, while the average per capita real income grew by a healthy 4.41 per cent per year since the 1980s, the income of the bottom 40 per cent actually declined by 0.24 per cent over the period.

Some rural areas (e.g. chars and haors) and urban locations (e.g. slum areas) in Bangladesh are highly disadvantaged in terms of basic needs of the people, especially education and health facilities. While the national average net attendance in secondary education is 49 per cent (48 per cent in rural areas and 53 per cent in urban areas), it is only 18 per cent in urban slums. Moreover, the situation is worst for children from poor households in all regions. Gender plays a vital role in access to education; and inequality persists in the percentage of school enrolment of male and female children.

In 2018/19, the government plans to spend Tk. 4645.73 billion (464,573 crore) which is 18.3 per cent of gross domestic product (GDP). The amount is Tk. 4724.42 billion  (472,442 crore) or 18.6 per cent  of  GDP  if the annual development product (ADP) allocation of Tk. 78.69 billion (7,869 crore) for autonomous bodies is added.  The allocation  for  non-development  and  other  expenditures  has  been estimated  at  Tk. 2915.73 billion (291,573  crore), which is   11.5 per cent of  GDP  and  the development expenditure is estimated at Tk. 1730 billion (173,000 crore).

The overall budget deficit is estimated at Tk. 1252. 93 billion (125,293 crore) which is 4.9 per cent of GDP. Of this, an amount of Tk. 540.67 billion (54,067 crore) or 2.1 per cent of GDP will be financed from external sources while an amount of  Tk. 712.26 billion (71,226  crore) or  2.8 per cent  of  GDP will  be  financed  from domestic  sources.  Of the  domestic  sources,  Tk. 420.29 billion (42,029  crore)  or 1.7 per cent  of  GDP  will  be  borrowed  from  the  banking  system  while Tk. 291.97 billion  (29,197 crore) or 1.2 per cent of GDP from National Savings Schemes and  other  non-bank  sources.

SECTORAL ALLOCATIONS THAT DIRECTLY TARGET THE POOR: In total, 27.3 per cent of the budget is allocated for social infrastructure; 24.4 per cent is for human resources development (education, health and others). We shall analyse sectoral allocations with programmes that directly target the poor people. Under health sector allocation, we assess universal health coverage including child and maternal healthcare. Under the education sector, we assess allocations to basic education, specifically free primary education programmes; and school health and nutrition. We also analyse budgetary allocations to social protection, namely cash transfer to vulnerable groups, including orphans and vulnerable children, older people and people with disabilities.

The Health Services Division and Health Service and Family Welfare Division of the Ministry of Health and Family Welfare will receive Tk. 233.83 billion (23,383 crore) or 5.0 per cent of total allocations  in 2018/19. The goal in the health sector is to ensure affordable and quality health and family welfare services for all. A sector-wide programme has been adopted for implementation during 2017-2022 under 29 operational plans. Providing  nutrient  foods  and  health  services  to mothers and children,  quality general  and  specialised health services for all, control of communicable and non-communicable diseases and diseases  caused  by  climate  change,  development  of  modern  and efficient medicine sector and skilled manpower are included under the  programme.  The maternal voucher programme will be extended to 20 upazilas and activities like expansion of infrastructures in different hospitals, increasing the number of hospital beds, supply of medical equipment and construction of specialised hospitals in different districts are being pursued.

One of the government's medium-term priorities in the health sector is the scaling up of universal health coverage including maternity health services, subsidies for poor and vulnerable groups and reducing out-of-pocket health expenditure. Further, the government intends to develop a national health insurance scheme as a health sector flagship programme to promote equity in healthcare financing. This is in line with the Sustainable Development Goals (SDGs). SDG3 urges countries to achieve universal health coverage by 2030 including 'financial risk protection, access to quality essential health-care services and access to safe, effective, quality and affordable essential medicines and vaccines for all'.   

With significant progress achieved in promoting primary education, the focus now is on providing education supportive of bringing about fundamental changes in the living standards and on creating better learning environment at schools. The emphasis is on following rules of personal hygiene and maintaining cleanliness of surroundings, morality, discipline and responsibility, life skills and mutual responsiveness.

The proposed interventions aim to broaden the scope of ongoing programmes such as providing stipends, distribution of free textbooks and logistics, school feeding and others. Further, the programmes plan to equip 7,000 primary schools with separate wash blocks for boys and girls to ensure  better  environment  for  education;  build 65,000  classrooms,  10,500 teachers' rooms, boundary walls in 5,000 schools and  distribute 30,000  pieces  of  sports-goods. As a follow-up of previous programmes, another 1,000 primary schools will be established in areas without schools. To ensure the provision of technology-based modern education system, Information and communications technology (ICT)-based community learning centres will be set up in all unions and some selected towns. A plan has also been chalked out to set up 64 livelihoods and lifelong  learning  centres in  64 districts.

At the secondary level, the priority is to strengthen merit-based assessment, highest use of technology in education programmes, promotion of science education, and improvement in the quality of education. Classrooms with multimedia facilities, language cum ICT labs and hostels will be constructed and furniture and equipment will be supplied under different projects. Moreover,  construction  of  46,340  multimedia  classrooms  and  2,120 smart classrooms has begun in 26,000 educational institutions at higher secondary,  secondary  and  madrasa  levels.  Piloting of  23  innovative concepts  is  being  carried  out  to  provide  education  related  services through  low  cost-time-visit  approach. 

Initiatives have been taken  to  set  up  one  technical  school  and college  in  each  of  100  upazila  and  technical  training  centres  in the remaining 389 upazilas. In addition, efforts are being made to popularise technical and vocational education by  developing  infrastructures  of  the  existing  training centres,  organising  short  training,  teachers'  training  and  stipend programmes. Besides, steps have been made to establish four women polytechnic institutes in four divisional headquarters, one girls' technical school in each divisional headquarters, polytechnic institutes in 23 districts and one engineering college in each administrative division. In order to modernise madrasa education, steps have been taken to establish 35 model madrasas and multimedia classrooms in 653 madrasas. The budget allocates a total of Tk. 530.54 billion (53,054 crore) or 11 per cent of total allocations for of the Ministry of Primary and Mass Education,  Secondary  and  Higher  Education  Division,  and Technical  and  Madrasa  Education  Division  of  the  Ministry  of Education. The proposed programmes are critical to achieving SDG4 -inclusivity in learning opportunities.

Regular programmes  for  providing  food  assistance  to  the  low-income households will be continued under the proposed budget through the sale of food grains at a fair price  in  open  markets  for  the  poor  together with other food-friendly programmes. In addition, distributing rice with required nutrients will be expanded to all upazilas in phases through the vulnerable group development (VGD) programme. The government is formulating the Food and Nutrition Security Policy 2018-19 for implementation of the SDGs. Programmes are under implementation for nutrition development for mothers, children and adolescents on a pilot basis which will be rolled out across the country in phases.

Apart from involving the poor in regular economic activities, social protection programme has been adopted as one of the tools to fight against poverty and inequality. Following the 7th Five Year Plan (2016-2020), every year the coverage and scope of the main programme is being expanded  for  the  marginalised  and  most  vulnerable  segment  of  the society.  The country's disaster-prone and ultra-poor regions are given priority while allocating resources.

Along with raising the rate of allowances and widening the beneficiary coverage, efforts are underway to introduce ICT-based reform programmes, including G2P payment method, to make the social protection programmes target-oriented, transparent and accountable. Besides, digital database integrated with national ID has been developed for every social security programme to prevent duplication in beneficiary selection.  Moreover, new applications for allowances, complaint handling, and budget allocation, disbursement, among others, are also being incorporated in the system. The  G2P  payment system  will be  introduced  through  the  piloting of maternity  allowances  and  old  age  allowances  in  seven  upazilas. The system will be rolled out across the country in the next fiscal year.

Currently, interest-free microcredit of Tk. 5,000 to Tk. 30,000 per family are being distributed among the rural ultra-poor through different schemes like  Rural  Social  Services  Scheme,  Rural  Maternity  Centre  Scheme, Rehabilitation  Scheme  for  Persons  with  Burn  Injury  and  Disability under the Urban Social Development Scheme. Moreover, self-employment opportunities  have  been  created  as  a  result  of  the  operations  of microcredit  schemes  conducted  by  different  ministries  and organisations.

After the completion of the Nationwide Disability Survey, information of all disabled persons is now available in the Disability Information System (DIS).  Development  programmes  are being  rearranged  and  new  development  plans  are  being  taken  up  to accommodate  the  services  to  be  provided  like  healthcare,  education, training  and  other  services  depending  on  the  level  and  type  of disability.

To facilitate self-employment of women, revolving credit facilities of Tk. 5,000 to Tk. 15,000 per person are being provided in 488 upazilas of 64 districts. Several training courses in a number of trades have been provided to women entrepreneurs through 25 programmes. Steps have been taken to provide income-generating training to 217,440 women at the grassroots level in eight divisional and 64 district towns as well as 426 upazilas. Working women hostels have been constructed and child daycare centres have been established in different districts and upazilas.

For the disadvantaged children, pre-primary education and other activities have been taken up through 2,109 centres in several districts. Under the programme, 20 daycare centres, 515 children development centres and 740 pre-primary education centresare being set up.  Since 2015/16, there has been an on-going process to prepare child budget which  brings  to  the  fore  how  much  allocation  is  provided  for  child development  and  what  policies and strategies  have  been adopted for their development.

Pensioners of the public sector constitute a tiny share of the elderly population in the country. Currently a  total  of 700 thousand-800thousand (7-8  lakh)  families  of  retired  government  employees and several private organisations get  pensions. A total of 3500 thousand (35 lakh) elderly poor people, in addition to government pensioners, get old age allowance of Tk. 400 per month. This number represents only a quarter of the total elderly population. The government's plan is  to  introduce  a  universal  pension  scheme  for  all working  population  engaged  in the private  sector,  both  formal  and  informal. Under the proposed arrangement, an employee will subscribe a specific amount to the pension fund and, where applicable, the appointing  authority  will  also  deposit  a  specific  amount  into  the employee's pension account. In the case  of  ultra-poor  workers,  the  government  will  deposit  a  specific amount  into  the  pension  fund.  However, introduction of universal pension scheme will require fundamental structural reforms which will take time and entail large costs. It will also be necessary to work out appropriate policy-strategy and action plan  and  put  in  place  technical  capacity  to  bring  about  equity  and consistency  between  the  pension  awarded  to  the  public  sector employees and the working population engaged in the private sector, in both formal and informal enterprises.

Further, to facilitate socioeconomic empowerment of people with disabilities, infrastructure improvement of institutions providing services to people with disabilities and capacity-building for disabled people's organisations are necessary. This poses a challenge as the need is to ensure economic and social benefits to people with disabilities that include improved livelihoods, improved physical accessibility in learning institutions, and increased school enrolment and performance.

In line with the 7th Plan, the government has been implementing pro-poor programmes for universal health coverage, universal access to basic education and cash transfers to vulnerable groups including older people, disabled people, orphans and children as well as food insecure households. Compared with those in the previous financial years, almost all the programmes favouring poor and vulnerable groups have been allocated more resources. However, there is a gap between actual allocations and resource requirements to ensure full coverage and create sustainable impacts. Deficits in allocations are observed in all programmes targeted to the poor and disadvantaged people. Further, implementation capacity in the respective sectors is low, which have negative implications on the quality of services. Overall, pro-poor sectoral and programme allocations are yet to take the centre stage in the national budget.

Mustafa K. Mujeri is Executive Director, Institute for Inclusive Finance and Development (InM).


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