Doomed Social Security Programs

Huge subsidy and social security Sometimes proved their futility. For the sake of a balanced budget Cut spending for social pocket.

A recent news report divulged that taka 503 crores of social security spending in support of the poor and underprivileged was marred in corruption. The projects were undertaken by Ministry of Social Welfare and Ministry of Planning own probe found gross irregularities in those projects ranging from no presence of greenhouse supposed to augment income earning opportunities, inadequate training programs, misappropriation of funds and so on. As project budget less than taka 500 million does not require cabinet’s approval, these projects were subject of widespread corruption¹. 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 implementation,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 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 billion. 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 /leakages in 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 swell 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.

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 deficit⁸.

Notes And References

1. ”Khatirer Prokolpo ,Iccheymoto Oniyom(Nepotism In Projects,Wilful Irregularities) “,Arifur Rahman,Daily Prothom Alo(P-1),August 01,2023.
2. “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
3. ”87000 Bhatabhogir Khonj Nei(No Trace of 87000 Beneficiaries)”, Najnin Akhter,Daily Prothom Alo, July 26,2021.
4. “Gorib Sajlen 10 Lakh Sochchhol(1 Million Affluent People Played Poor)”,Arifur Rahman,Daily Prothom Alo,August 02,2021.
5. “Pronodonar Taka Noy Chhoy(Misuse of Incentive Money)”, Daily Prothom Alo,July 26,2021.
6. “ 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
7. “Live Stock”,Rezaul Hoque,https://hoquestake.blogspot.com/2020/01/live-stock.html?m=1,January 11,2020
8. "Another Flawed Incentive Program?",Rezaul Hoque,June 10,2022,https://hoquestake.blogspot.com.For more read at https://hoquestake.blogspot.com/2022/06/another-flawed-incentive-program.html?m=1

Universal Pension Bill: Could It Really Take Off?

Parliament passed universal pension bill There is a budget deficit to fill. Low output and trust Will not raise the savings fast And may not bring pace to economy’s wheel.

Last week Bangladeshi Parliament gave its nod to universal pension bill. People between 18-year and 50-year are eligible for participating in this program. However, the program has raised lots of questions. Back in July last year, I wrote a piece,titled “Do We Need Social Security Programs?”¹, about futility of carrying such program in Bangladesh. Sharing parts of it again:

Argument put forward in favor of raising social spending is that in many developed economies social security spending occupies a decent share of GDP and in Bangladesh it is still below 3%.

In many of these developed economies, public opinion,petition lead the public representatives to scrutinize opaque issues,to summon concerned people at the Parliament to offer explanation. And the free press is allowed to broadcast and print details of the hearing. In Bangladesh that never happens. There are privileged people who roam scot free and hardly have any accountability. And a section of press,capable of manufacturing « narrative », keeps disseminating disinformation to maintain status-quo.

In many of these developed economies, unemployment rate is pretty low and they have a concept of social contributions apart from income tax.In a country of 160 million where we have only 7.5 million registered taxpayers,this idea of social contribution is alien. Many here enter job market pretty late. And prospect of job at private sector is pretty uncertain as ruling elites dominate the business. In the wake of regime change or corruption, many found themselves in the club of unemployed. In addition, a large part of our workforce involved in informal sector where scope for saving or making social contributions is very minimal. In developed economies, people contribute to government fund very long time to receive benefits during their post retirement age.In Bangladesh that kind of prospect is very bleak as very few could manage to do so. Here govt finances the social security programs through indirect tax,borrowing from banks and abroad.People’s participation in social contributions is absent. And most of this tax money falls into wrong hands. To sustain a government-run social security program,government has to collect contributions from many people just to give benefit to one retired person. But the concept of ratio of active age to retired age population and intergenerational transfer ²are not working in Bangladesh as we do not have well functioning institutionalized job market. One solution is to call for voluntary support to social security fund.

Govt may float social security bond,starting from TK 100. Those who are interested may buy these bonds using NID card. And NBR will track the number of bonds held by each NID. Based on the amount of one's contribution, one individual may receive a certain sum during his post retirement life. Government may also add fund to it. For instance, if social security bond fetches TK 100 crore. Government may contribute another TK 100 crore and distribute the money among the target population. Government may also launch a lottery to finance the program,more plausible than the social security bond. 5% of lottery buyers have chance to win some prizes while 95% will have the feel good factor. The point is if you really want social security then you have to contribute to it. Government in no way is going to pay fully the whole social security spending.

The bill has made it clear that to avail pension one has to contribute to the pension fund pool for at least 10 years. At the age of 60 or the retirement age,one will receive the pension amount. But the program is introduced at a moment government is facing liquidity crisis. In addition ,budget deficit keeps growing. In 2020,budget deficit was 4.9% of GDP. In 2022,it reached 6.2%. To finance deficit govt borrowed both from internal and external sources. Government borrowing from banks was 2.25% in 2022. Meanwhile, our debt to GDP ratio was around 12% in 2022³.So in the election year,universal pension program aims to draw voter attention and to bring vital money into the banking system. In developed countries, pension funds are huge. As such funds lie in the banking system for a prolonged time, govt is hoping to use the fund to finance development projects by borrowing from the banks. One member of the Parliament quite rightly laid bare govt intention,saying that people would not be fooled by trusting again this government who emptied the banks. As the deficits get widened,our output will be lower. Our major markets across the globe are in recession. So savings will be lower in the long run. Thus government’s plan to raise savings through pension fund may not go as smoothly as it conceived at the initial stage.

Household’s ability to spend will deteriorate further in the wake of inflation, loss of income and further fall of Taka in the future. So, how many of the people outside institutional job market will participate in this program is a matter of serious scrutiny.

As govt is mulling to offer ration card to 10 million vulnerable families, it is better to downsize/abolish other social programs. At the end of the day,money well spent or lost belongs to people. I think in the face of rising budget deficit and rampant corruption in the financial sector, this universal pension program will not garner much attention. Only government with popular mandate can float and initiate such social security program. For that a transparent and acceptable election that will promise to improve the governance situation is a must.

Notes And References:

1. ”Do We Need Social Security Programs? “,Rezaul Hoque,https://hoquestake.wordpress.com ,June 16,2022. For more read at https://hoquestake.blogspot.com/2022/06/do-we-need-social-security-programs.html?m=1
2. “Macroconomics”,Rudiger Dornbusch,Stanley Fischer,Richard Startz,7th edition,McGraw-Hill.
3. Bangladesh Bank

Another Flawed Incentive Program?

Huge subsidy and social security Sometimes proved their futility. For the sake of a balanced budget Cut spending for social pocket.

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.

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:

1. “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
2. “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
3. ”87000 Bhatabhogir Khonj Nei(No Trace of 87000 Beneficiaries)”, Najnin Akhter,Daily Prothom Alo, July 26,2021.
4. “Gorib Sajlen 10 Lakh Sochchhol(1 Million Affluent People Played Poor)”,Arifur Rahman,Daily Prothom Alo,August 02,2021.
5. “Pronodonar Taka Noy Chhoy(Misuse of Incentive Money)”, Daily Prothom Alo,July 26,2021.
6. “ 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
7. “Live Stock”,Rezaul Hoque,https://hoquestake.blogspot.com/2020/01/live-stock.html?m=1,January 11,2020

Omicron Restrictions And Some Concerns

Omicron casts shadow over life and business,
Causing worries without any guess.
Ineffective social security programs and packages
Demand new way to manage the damages.

As the daily detection rate from Omicron reaches the worrying level, government has reintroduced sanitary restrictions. Just on Thursday, govt confirmed 3500 cases of Omicron(12%). And the number continues to swell. The number of people vaccinated(less than one-third) is still low compared to total population¹. Among others, the restrictions include 1 passenger per seat in public transport , musk-wearing and must vaccination certificate for eating at restaurant. However,main opposition views the restrictions as a tool to contain their movement for freeing chief of the opposition party detained under trumped-up charges. There is some truth in accusation.

But it is the economic concerns of the COVID related restrictions that cause most worry. Platform of businessmen held a press conference and urged govt not to impose lockdown. Lockdown seriously hampers economic activity and businesses are yet to recuperate earlier losses.

Moreover, there has been call from various quarters for widening the social safety net. But misuse of social security programs and incentive packages left a serious blot in government reputation.

Back in August 08,last year I penned a piece titled “Flawed Incentive Programs”²,highlighting irregularities reported in the press on government backed programs. Sharing bits of it again:

… 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 flat⁵.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 level⁷.

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 are 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.

Recently IMF in a report raised concerns as it observed the real forex reserve of Bangladesh Bank should be $39 billion instead of claimed $46 billion. IMF noticed that $7 billion of the reserve used to finance infrastructure projects,to lend local banks ($6.83 billion) to ease dollar demand and to lend abroad⁸. However, such deductions(spending on non-forex assets) did not reflect on forex reserve. Now only time will tell whether the ailing banks will be able to pay back the money to Bangladesh Bank.

The cry for fresh incentives and social security programs is louder. Without making proper scrutiny of the fate of earlier funds,it would be a mistake to announce fresh packages and credits. The best way to disburse packages is through microcredit agencies as this could thwart away potential default ers or frauds. For administering such packages,respective agency would receive a fee and would charge special or no interest rate. For instance, an agency may receive Tk 5 for managing a credit of Tk 100. Government will lend Tk 100 to microcredit agency and the agency will lend Tk 95 at 0% to people. If soft interest rate is charged then govt's contribution to agency will be lower. In case of any default or calamity, govt may offer further credit.Leakages and losses will be much more lower than the traditional disbursement of social security programs/incentive packages.

And I wrap up with the concluding remarks of the August piece:

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 swell 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.

Notes And References:

1.“Omicron: Spreading fast,Restrictions Begin From Today”,BBC Bangla,January 13,2022,Link here

2. “Flawed Incentive Programs”,Rezaul Hoque, https://hoquestake.blogspot.com, August 08,2021,Link here

3.”87000 Bhatabhogir Khonj Nei(No Trace of 87000 Beneficiaries)”, Najnin Akhter,Daily Prothom Alo, July 26,2021.

4. “Gorib Sajlen 10 Lakh Sochchhol(1 Million Affluent People Played Poor)”,Arifur Rahman,Daily Prothom Alo,August 02,2021.

5. “Pronodonar Taka Noy Chhoy(Misuse of Incentive Money)”, Daily Prothom Alo,July 26,2021.

6.“Ashrayan-2 Project Scam: 36 Upazilas Under Scanner”,Ali Asif Shawon, Dhaka Tribune,July 06,2021.

7. “Live Stock”,Rezaul Hoque,https://hoquestake.blogspot.com/2020/01/live-stock.html?m=1,January 11,2020.

8.“Forex Reserves Overstated By $7.2 Billion: IMF”,Jebun Nesa Alo, Business Standard, October 23,2022,Link here

Flawed Incentive Programs

Corruption in social allowance
Lays bare government incompetence.
Public money in wrong hand
Poses risk and danger for the land.

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 programs¹. 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 program². 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 ³. 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 upazilas⁴.

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. ⁵

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 billion¹. 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.

Notes And References:

1.”87000 Bhatabhogir Khonj Nei(No Trace of 87000 Beneficiaries)”, Najnin Akhter,Daily Prothom Alo, July 26,2021.

2. “Gorib Sajlen 10 Lakh Sochchhol(1 Million Affluent People Played Poor)”,Arifur Rahman,Daily Prothom Alo,August 02,2021.

3. “Pronodonar Taka Noy Chhoy(Misuse of Incentive Money)”, Daily Prothom Alo,July 26,2021.

4 “ Ashrayan-2 Project Scam: 36 Upazilas Under Scanner”,Ali Asif Shawon, Dhaka Tribune,July 06,2021.Link here

5 “Live Stock”,Rezaul Hoque,https://hoquestake.blogspot.com/2020/01/live-stock.html?m=1,January 11,2020.

Unemployment Benefit : Bane Or Boon?

[My website https://rezaulhoque.wordpress.com is inaccessible. It may be blocked. I launched this one to publish my takes and reviews on weekly events till I get back my access to the website.
-Rezaul Hoque ]




Generally, election manifestoes are not that much attractive. This election turns out to be different. More or less all the parties touched the issue of social security programs in their manifestoes. It is a good sign that they are waking up to the grave social concerns.


Though they did not promise moon to the left-outs, but introduced some propositions that sound practical. A new addition to our existing social security program is the promise for unemployment benefits. A bit late but a welcoming step.

One party promised to provide unemployment benefits for the first two years.Another party promised benefits plus dissolution of age limit for government jobs. Ruling party promised to offer job to one unemployed youth of every family.

All the major parties seem agree to offer some kind of benefits to the unemployed. This will increase the expenditures on social security.


First take a look at the spending on social security over the years. I dipped into the statistics on social security programs as reported by Bangladesh Economic Survey. In its second term, the expenditures on social security have grown by manifolds.In 2014-2015, our social security expenditures were Tk 30,751.11 crore. A year later, it grew to Tk 37,546 crore. Now in the current fiscal year government allocated Tk 54,205.89  crore(proposed) for spending on social security.
Largest part of the social security programs is attributed to various cash benefits programs, followed by food security measures.

Of the social security programs, cash benefits given to various groups have risen significantly over the years. Among others, beneficiary target groups include widows, aged people, physically challenged people, freedom fighters and poor mother on maternity leave.

In 2013-2014, government spent Tk 9,666.25 crore behind various cash benefit programs.In 2014-2015, it increased to Tk 12,667.28. In 2015-2016, government doled out Tk 16, 485.83 crore to various vulnerable and left-out groups. Spending on social security programs  further increased and became Tk 19,594.16 crore. In 2017-2018, government allocated Tk 30,854.64 crore in cash benefit programs.

If the parties really keep their words, then the unemployment benefit scheme will further broaden government's cash benefit programs. Unlike other cash benefits, government can easily cover the spending on unemployment benefit scheme. I will spell it out a bit later. Before that let us have a look at the breakdown of the cash benefit scheme.

In 2017-2018, government planned to provide Tk 500 per month to 3.5 million aged people, resulting in Tk 2,100 crore. It also planned to provide Tk 500 per month to 1.265 million widows, costing it Tk Tk 759 crore. It allocated Tk 360 crore as maternity benefits to poor mothers. Tk 120 crore for lactating working mother. Tk 3,200 crore for freedom fighters. The list continues with minuscule allocation to many groups. To make the discussion brief, I prefer not to highlight them here.

At the individual level, the sum is meager and may not be enough to alleviate the sufferings of the target group. However, this is a statement that the country does care about the the vulnerable groups and

recognize their role in nation building.        

Cash benefits to the unemployed can be viewed as boosting consumption. By providing cash benefits to a section of active population, government is broadening the purchasing power of a group. It also contributes to increase the consumer class. Given the ability of our government, the benefit it will provide to the unemployed will be meager. Say it will be Tk 500 per month. To an unemployed, it is just a pocket money. My own observation is that only 3 or 4 million unemployed will comply for this benefit scheme. Now for 4 million unemployed people if the government doles out Tk 6,000 per annum it will cost the government Tk 2,400 crore.

But as I have said by spending this amount the government will notch up gains in boosting consumption and reducing vulnerability of certain section of the society.

And the best part of this program is that it can recuperate the spending by slashing part of their earnings or imposing duties on their existing consumption.

Those who will comply for this social security program should have a social security number. For the moment, let us think  national id number is the social security number. In a bank account, the monthly benefit, in our case it is Tk 500, may be provided against this number.
Spending can be recovered in a short span of time. Supplementary duty on mobile call rate can be viewed as a potential source for its funding. For instance, off peak call hours can be aimed to impose this duty. Government can also slap further duties on tobacco items to finance the spending.

But the biggest source of revenues could be this very target group. When they get a job,government can deduct part of their monthly income till the benefit fully get covered. Or they can pay back the whole amount at a convenient time.

Another potential source of funding could be unused fund of annual development projects. Government takes numerous development projects throughout the year. In reality, it implements very few of them. In addition, many of these projects are designed to cater to the demand of political stalwarts. They have little significance to lives and livelihoods of local people. In plain words, these are waste of taxpayers' money. Part of the development fund could be diverted to finance the unemployment cash benefit scheme.



So this annual Tk 2,400 crore , Tk 6,000 per annum for one unemployed person, does not appear to be a spending instead an incentive to boost domestic consumption. Moreover, the money spend here will return to government's coffer.

In broader perspective, the new social security program for the unemployed is more than a social security spending. It will have tremendous impact on local economy, ranging from an increase in consumption to improve the businesses of SMEs.The best part of it is that our ailing banks will give a sigh of relief when this Tk 2,400 crore will be injected into the banking sector.

It is indeed a good move by our political parties that they have pledged to address the growing unemployment problem through social security programs. The amount may be meager, but it will definitely have a lasting impact on  economy and people. And the new spending will not be an extra burden to the government if  it is financed by resources drawing from the target group for whom it is meant.