Huge subsidy and social security
Sometimes proved their futility.
For the sake of a balanced budget
Cut spending for social pocket.
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Government has formally presented the budget for FY 2022-23. Around TK 83000 crore of subsidy & incentive has been proposed. A large part of this subsidy will be attributed to energy,fuel and fertilizer. To ensure food security and contain the inflationary pressure, TK 16000 crore subsidy on fertilizer is justified1. TK 33092 crore is allotted in the name of social security. But when government is running a huge budget deficit, this huge subsidy and social security spending is unacceptable. Many multilateral institutions revising their growth forecast including slower growth in developed economies.Interest rate/policy rate increase in US and EU hints to that direction.This means demand for oil, gas will be much lower in these countries. There will be reflection of it in LNG and oil prices.I can’t figure it out why the subsidy on BPC is going on when cheaper sources of oil are available. Supply side uncertainty about food grain, cooking oil and fertilizer is largely responsible for driving up the price levels. High oil price is partly to blame. In that light subsidy in food and food production is ok. But this BPC subsidy money should be shared by consumers and shelved for better use.
On the other hand, government of Bangladesh's track record on social security spending is marred with corruption.Back in August last year,I penned this piece titled “Flawed Incentive Programs”2 to highlight the ineffectiveness of social security spending due to unwarranted corruption. Sharing it again:
In recent weeks, series of reports laid bare flaws and inefficiencies attached to social security programs and incentive packages designed to assuage Corona-battered business community. Built-in corruption in management and disbursement of funds of the programs, as exposed by the news reports, once again undermines people’s trust on government at a moment when it badly needed their support to mobilize resources on measures to restore COVID-hit economy.
A news report divulged that Ministry of Social Welfare detected some 87,000 fake beneficiaries who swallowed benefits under social security programs3. The matter surfaced when the ministry is implementing digitization of accounts of beneficiaries. So far 7.6 million accounts have been digitized and 2 millions await to join the list.
Another program designed to augment income-earning opportunities for the poor has come under criticism after a government report found irregularities. The 12-year-long "Amar Bari ,Amar Khamar( My Home,My Farm)" benefited 5.7 million people,but 1 million beneficiaries were identified as affluent, not eligible for such program4. Department of implement ation,monitoring and evaluation of Ministry of Planning in its report found that 1 million ,17% of the total beneficiaries, fake beneficiaries took interest-free credit reserved for the poor under the “Amar Bari,Amar Khamar” Project(2009-2021) ,costing TK 78.85 billion of taxpayer’s money. Some swindled the credit for 12 years.
Not only social security programs, irregularities can be traced even in Corona incentive packages for businessmen. Government allotted credit of Tk 300 billion for big businesses and credit of Tk 150 billion for SMEs at subsidized rate of interest. According to a news report, many businessmen misused the credit by repaying old debts,investing in share market and purchasing flat 5. It derailed the objectives,propelling economic activities, the credit package initially conceived of. Instead of bringing the pace in manufacturing, retail and SME activities, misuse of the fund makes it unlikely to avail more soft credit in the future. So cash-strapped SMEs will face further problems to manage working capitals for their businesses.
Earlier 22000 fake freedom fighters had been detected in freedom fighter allowance program. Facing a barrage of criticism, government hardened the procedures for identifying the true freedom fighters and discarded the fake ones from the list.
Even corruption mars "home for the homeless" project,which is being implemented by Prime Minister’s Office. Use of substandard materials, project site on flood-prone land and bribery called into question the objective of the whole project.Even PM' s office has started probe in 36 upazilas6.
My own survey on rickshawpullers for my site reveals that only a minority of the true target population receives the social security programs. I interviewed 43 rickshawpullers and only three subscribed to any of these programs. And all of them were relatives of local representatives who are responsible for running the operations of social security programs at grass root level. 7
The revelations expose inefficient management of public funds and waste of taxpayer’s money. This will further hold back widening of social security programs and implementation of post-COVID efforts.
One thing is apparent that most of the scams in social security programs got exposed while digitizing the database. If mobile operators and mobile financial service providers can able to sell SIM and open accounts with biometric verification why can the government not go for this step to identify the beneficiary population?Bangladesh runs an array of social security programs from allowance for senior citizens to allowance for freedom fighters. These programs cost Tk 641.76 billion in 2018-19(Source: Bangladesh Economic Review 2019) and in 2021 rose to Tk 955.74 billion3. Even tiny scam could wipe out thousands of crores of taxpayer’s money. Seldom heard or reported in the press about the fact that other government agencies had given prior information about murky affairs or shoddy dealings in various programs run by ministries. This fund may fall in wrong hands and may be used to stir trouble at home or abroad or weaken democracy and democratic institutions. So there is no reason to take wasting of taxpayer’s money slightly.
Ensuring accountability of all government organizations is the key to plug the holes in leakages of management of public fund and resources. If this continues without any checks, people’s trust on government and government institutions will erode and their support on undemocratic forces may rise. Just throwing the money in gutters in the name of ineffective social security and corona incentives only swollen the pockets of a certain quarter who excel the art of misappropriating public funds and those who have evil intentions to cause trouble at home and abroad. Amending the laws to hold all the quarters accountable to constitutional bodies is the first step to stem corrupt practices.
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Things have not improved much in one year. A news report says a Medical Assistant Training School ,cost TK 210 million, in Gazipur has turned into a safe place for addicts. Another report says boat ambulance donated by govt in haor region turned useless in one year. More recently Bangladesh Army approached govt to write off the commercial loans it took from public banks to set up Sena Edible Oil Company. The oil company did little help when oil prices soared recently.It appears that mismanagement and misuse of public money have become contagious. This tendency only wastes our valuable resources. “Public investment” at the end of the day is just a big failure and a waste of time and money. In a country where caring of public resources, accountability are absent, there is no point to run subsidy and social security programs that hardly meet the intended goals. Removing/downsizing some of the social security programs and cutting subsidy will be a much more desirable move in the wake of growing budget deficit and current account deficit.
Notes And References:
- “Agri-subsidy Aims To Not Let Runaway Food Prices Tumble Further”,Shawkat Ali,Business Standard,June 09,2022.For more read at
https://www.tbsnews.net/economy/budget/agri-subsidy-aims-not-let-runaway-food-prices-tumble-further-436734
- “Flawed Incentive Programs”,Rezaul Hoque,https://hoquestake.blogspot.com,August 08,2021. For more read at
https://hoquestake.blogspot.com/2021/08/flawed-incentive-programs.html?m=1
- ”87000 Bhatabhogir Khonj Nei(No Trace of 87000 Beneficiaries)”, Najnin Akhter,Daily Prothom Alo, July 26,2021.
- “Gorib Sajlen 10 Lakh Sochchhol(1 Million Affluent People Played Poor)”,Arifur Rahman,Daily Prothom Alo,August 02,2021.
- “Pronodonar Taka Noy Chhoy(Misuse of Incentive Money)”, Daily Prothom Alo,July 26,2021.
- “ Ashrayan-2 Project Scam: 36 Upazilas Under Scanner”,Ali Asif Shawon, Dhaka Tribune,July 06,2021. For more read at https://www.dhakatribune.com/bangladesh/2021/07/06/arshrayan-2-project-scam-36-upazilas-under-scanner
- “Live Stock”,Rezaul Hoque,https://hoquestake.blogspot.com/2020/01/live-stock.html?m=1,January 11,2020
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