Bulk of social assistance to be distributed through digital cash transfer under FY26 budget

The government has allocated 40.05 per cent of total social assistance to be distributed through digital cash transfers in the proposed national budget for FY 2025-26 (FY26), aiming to enhance transparency and efficiency in the sector.

Social assistance remains the largest functional category within the broader social security framework, according to the budget papers, reports UNB.

The government has made significant progress in modernising this segment through digital means, reflecting its commitment to poverty alleviation and human rights.

According to the proposed budget, direct Government-to-Person (G2P) payments now account for 40.05 per cent of all social protection interventions, up from 35.70 per cent in FY24 and 34.48 per cent in the ongoing FY25. Of the 30 cash-based programmes under social protection, 29 are currently covered by G2P systems.

In total, Tk 475.97 billion has been allocated to 36 different programmes under social assistance, which constitutes 40.78 per cent of the total social security budget of Tk 1.167 trillion for FY26.

The transition to digitised cash transfers-utilising Mobile Financial Services (MFS), Electronic Fund Transfers (EFT), and the National Payment Switch Bangladesh (NPSB)-has improved service delivery, minimised leakages, and reduced administrative costs.

These reforms align with the National Social Security Strategy (NSSS), which advocates for robust delivery systems and better targeting.

Digital initiatives such as the Dynamic Social Registry, part of the Social Protection Digital Transformation Project, are also supporting this transformation.

The expansion of one-off cash grants and stipends further reflects Bangladesh's efforts to build a responsive and adaptive social protection system. In FY26, one-off cash grants are set to increase to 19.24 per cent from 17.96 per cent in the current fiscal, while stipends will slightly decline to 10.64 per cent from 11.92 per cent.

These cash-based programmes provide recipients with greater flexibility and dignity, allowing them to meet urgent needs such as healthcare, education, and nutrition.

Although food assistance continues to play a critical role-rising to 11.01 per cent of social assistance in FY26 from 6.40 per cent in the current fiscal, the government's gradual shift to cash transfers aligns with global best practices and the NSSS direction to phase out costly in-kind support.

Meanwhile, the budget reflects a reduced emphasis on public welfare programmes, with allocations falling to 6.85 per cent from 18.46 per cent. This shift signals a focus on direct income support for vulnerable populations, including women, the elderly, and persons with disabilities.

Bangladesh's investments in digital infrastructure, fintech innovation, and partnerships with financial institutions are positioning the country as a regional leader in inclusive, technology-driven social protection.

The continued growth of digital cash-based assistance highlights the government's resolve to promote financial inclusion, empower women economically, and foster sustainable development.

On June 2, Finance Adviser Salehuddin Ahmed placed a Taka 7.90 trillion national budget for the fiscal year 2025-26, which is 12.7 per cent of the GDP, through a pre-recorded televised video.

This is the country's 54th budget and the first of Professor Dr Muhammad Yunus-led interim government.

Out of the total budget size, the operating cost and other expenditure have been estimated at Taka 5.60 trillion while the Annual Development Programme (ADP) has been estimated at Taka 2.30 trillion.