New Delhi, March 21 Bangladesh's launch of the Family Card programme, promising 2,500 (in local currency) monthly allowance for vulnerable families risks serious fiscal strain and may doom its overburdened social‑welfare system, a new report has said.
Bangladesh’s tax‑to‑GDP ratio, one of the lowest in the world and inflexible commitments in its national budget, including debt interest and power subsidies, leave little room for a new recurring commitment, said a report from Bangladesh-based Daily Star.
Financing the programme at scale could force difficult trade-offs including reallocation from education or health budget, the report indicated.
"Reducing the education and health budget will be a short-sighted solution as it will undermine the country’s growth potential," the report said.
Similarly, the Annual Development Programme (ADP), if deprived of funds, will slow down the country’s infrastructure growth, reducing its manufacturing capacity.
Discussions around the Family Card programme have focused largely on benefits with little attention to opportunity costs, it pointed out.
The report urged the government to treat the launch as an opportunity to reform the overall structure of the social welfare web, instead of adding “another layer of inefficiency to an already crumbling system.”
"Bangladesh already has around 140 social protection programmes running under 26 ministries, but they have been roundly criticised for their inclusion and exclusion errors," the report said, pointing at a flaw in the design of the Family Card programme.
If the money is transferred to those who are not actually poor, then the programme will end up being wasteful, the report indicated.
“Perhaps the funds could be better utilised for programmes that have a long-term rate of return, such as those that combine early childhood nutrition with effective communication and skill training,” it suggested.
It cited a recent study that found cash transfers only give a temporary reprieve from poverty, but a combination of cash and complementary services like nutrition education may result in a long-term solution to poverty.
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