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State Role in Welfare in
Attacking Extreme Poverty
Mozammel Huq
Department of Economics
University of Strathclyde, Glasgow
12 November, 2013.
Structure of the paper
• Introduction
• State role in Income Distribution: Theoretical
• SSN Programmes in Bangladesh: An Overview
• A Brief Assessment: Findings of the Various
• Impact of SSNs on Poverty Decline
• Concluding Remarks
Proverty trends in Bangladesh
*1 1-8
98 2
*1 -84
19 -86
19 - 89
19 - 92
Poverty Head Count
Ratio by the DCI
Method 1981- 82 to
2000 (% of population)
Fig 1: Bangladesh - Dramatic Fall in Poverty
Source: Bangladesh Bureau of Statistics, Household Income and Expenditure Survey
(various years).
Main Objective
• To review the SSN programmes in Bangladesh, in
particular its role in attacking extreme poverty.
• Thus, we are taking a narrow focus, confining the
discussion to the attack on poverty via the SSN
• Related to the above, gain awareness of the issues
and concerns regarding the effectiveness of the SSN
programme for attacking extreme poverty in a lowincome country such as Bangladesh.
Fig 2: Social Safety Nets viewed in the context of a wider
framework of Development Policy
Source: Grosh et al. (2008).
Theoretical Perspectives
(only some key points)
• As with the efficient allocation of resources, the economists
have remained concerned with the distribution of income.
• Society's view of just distribution may conflict with the
existing distribution. In particular, there is concern with the
injustice in the original distribution of endowments.
• Also factor market imperfections, especially monopoly pricing
of the factors of production, can be an important cause of
income inequality.
Theoretical Perspectives (cont’d)
• Private redistributions made voluntarily, say through charities, are
riddled with problems, a major concern is that the task may be too
big for the private redistribution to execute.
• Musgrave (1959), among others, would like to justify state intervention to
maximise social welfare.
• Moreover, various charities may compete with each other as a
coordinating role will be missing. Indeed, the state can perform a
redistribution policy in a coordinated and comprehensive way.
(See, e.g. Brown & Jackson 1990.)
• However, Hayek (1960)and other libertarians are rather concerned
that state intervention in income distribution will cause curtailment
of personal freedom and, in the process, hamper growth.
• Hence the emphasis on voluntary contributions made by individuals personally
and/or help channelled through NGOs.
SSN Programmes in Bangladesh
• In Bangladesh, the SSN programmes got a serious start in the early
1990s with the democratic government taking over in 1991.
• There now exists an extensive range of SSN programmes, as many as
90 or so (World Bank 2006; Khuda 2012; GOB 2011 Part 2).
• “The bulk of the programmes are implemented through government
channels. However, non-government channels play an important
supportive role particularly in those programmes focused on
sustainable graduation. 97% of annual allocations are spent through
30 major programmes.” (Rahman and Chowdhury, 2012, p. 3).
• The programmes are mainly rural based, those with “an urban focus
as yet remain minuscule , as only 0.7% of the total allocation”
(ibid, p. 3).
Table 1: Major Types of SSN Programmes
• Cash Transfers
• Old Age Allowance
• Widowed and Distressed Women Allowance
• Disabled Allowance
• Conditional Cash Transfers
• Primary Education Stipend Program (PESP)
• Stipends for Female Secondary Education
• Public Works or Training-based or in-kind Transfer
• Rural Maintenance Program, Food for Work
• Vulnerable Group Development (VGD)
• Employment Generation Program (EGP)
• Emergency or Seasonal Relief
• Vulnerable Group Feeding
• Gratuitous Relief (GR); Test Relief (TR)
• Open Market Sale (OMS)
Source: GOB (2011), 6th Five Year Plan, Part 1, o.166.
Major SSN Programmes: Govt Expenditure
• Govt expenditures (as % of GDP) on SSNs from 1999-00 to
2011-12 are shown in the next slide (Fig 3).
• Except the Food for Work programme (in which financial
allocation by the Government of Bangladesh decreased
from Taka 8,060 million in 1999-00 to Taka 6,224 million in
2011-12), all the other major SSN programmes have
witnessed an increase in allocations (some shown in Fig 4).
• Such increases are particularly marked in Honorarium for
Freedom Fighters, Primary Education Stipend Project, Old
Age Allowance, and the Allowance for Destitute Widows.
Fig 3: Government Expenditures on SSNs:
1996-7 to 2004-5 (as % of GDP)
• Note: The Govt allocation on SSN has recently been increasing, from less
than 1% of GDP in 2004-05 to just over 1.5% in 2010-11,
Source: Based on data from World Bank (2006).
Fig 4: Growth in Expenditures: Major SSN Programmes
Price (Mil Taka)
1999-00 to 2011-12 (In Mil. Taka: At 1999-2000 prices)
Gratuities Relief & Test Relief
Vulnerable Group Feeding
Primary Education Stipend
Source: Based on data from Khandker et al. (2011).
Review and Assessments
• The emergence and the growth of the SSN programmes in
Bangladesh have attracted attention from a large number
of researchers.
• Various international organisations including the World
Bank, UNDP and FAO have also shown a keen interest in it.
• Findings from selected studies (shown below).
Mannan & Paul-Majumder (2003),
based on Field Surveys
• Coverage: Country-wide, seven major SSN Programmes
• Main Findings: The targeted programs have positive
impact on income, food consumption and access to safe
• However, there is an urgency to extend the coverage
with additional funding allocation.
• Also the distribution mechanism needs to be improved
to get rid of political patronage.
World Bank (2006),
Analysis of key primary data.
• Coverage: Country-wide, based on HIES 1991 & 2000, and
2000 Labour Survey, & a 2003 survey of selected SSNs
• Main Findings: SSN expenditures are extremely low, less than
1% of GDP during the late 1990s and the early part of the last
decade (the highest was 0.91% of GDP in 1998-99).
• Also, numerous agencies are involved in administering these
programs – with “frequent overlapping between programmes
and inadequate co-ordination across ministries.”
Khaleque et al (2008),
Overview of SSNs in Greater Rangpur, a highly poverty-stricken area
• Coverage: Assessment of SSNs in the monga-affected Greater
• Main Findings: “VGD/VGF has strong positive effect in
reducing poverty while old age pension has no such
• Highly vulnerable groups such as day labourers and beggars are
found to be “left out from the benefit of SSN programs due to
their limited coverage and size.
• Also, inter-ministerial coordination is found to be lacking,
resulting high administrative expenses.”
Begum & Paul-Majumder (2008),
based on Field Surveys, Dec 2000-Jan 2001
• Coverage: Country-wide, Destitute Women’s Allowance.
• Main Findings: 86% of the recipients spend their
allowance to satisfy their food and basic needs.
• However, there is an urgency to extend the coverage as
only around one-fifth of the deserving destitute women
are getting the allowance. Also need to increase the
Paul-Majumder & Begum (2008),
based on Field Surveys, 2000
• Coverage: Country-wide, Pension for the Elderly Poor
• Main Findings: Programme largely successful, 96% of
the poor elderly recipients are able to meet part of their
basic needs.
• However, the coverage of the programme has remained
yet very limited or far below the appropriate level.
Morshed (2009), General Overview
• Coverage: Country-wide
• Main Findings: Both Govt and non-Govt agencies are
actively implementing SSN programmes.
• However, most implementing ministries lack sufficient
capacity to monitor programmes.
Maniruzzaman (2009),
based on Field surveys, 2007-08
• Coverage: Assessing Food insecurity in Char (flood-prone) areas
• Main Findings: High level of food insecurity (90% in Kurigram),
while 34% in Narsingdi.
• 34% of the 321 male-headed households and 61% of the
female-headed households received some SSN benefits, so
greatly helping them with food security.
Khuda (2011),
General assessment
• Coverage: A general review of the SSNs in operation.
• Main Findings: High success of the SSNs, the lessons
learned should even be of great help for other lowincome countries.
• However, need to improve co-ordination significantly.
Khandker et al (2011),
based on Household surveys, 2006-07
• Coverage: Review of SSNs in the ‘monga-affected Greater
• Main Findings: SSSNs are found to have a positive effect on
mitigating both seasonal and non-seasonal food deprivation.
• However, the study recommends investment in physical
infrastructure and human capital, and argues for
diversification of income and increase in productivity.
Huq and Salimullah (2012),
based on Field Surveys, 2010
• Coverage: Assessment of the SSN programmes in rural and
urban areas.
• Main Findings: Only one-fifth of the rural households received
Govt-provided SSN benefits, while in urban areas it was
almost negligible.
• NGOs were providing SSN-type benefits in both rural and
urban areas, helping about 13% households in the former and
just over 4% of the urban poor households.
Rahman & Chowdhury (2012),
based on Field Surveys, 2010-11?
• Coverage: Country-wide, comprehensive review.
• Main Findings: Improvement in income and food intake,
also halving of hunger in the chronic deficit areas.
• However, serious concerns because of disaggregated
nature of the coverage gaps, multiple types of leakages,
presence of some low value-for-money programme
Impact of SSNs on Poverty Decline,
Findings by Inchauste et al (2012)
• Negligible role of public transfers in poverty reduction in
Bangladesh; “leakages and small size of individual transfers
made their impact on poverty negligible, despite an expansion
of transfer programs during the last decade”. (Inchauste et al,
2012, p19).
• In contrast, labour-market related factors contributed to 61%
of poverty decline in Bangladesh, “pointing to an increase in
real wages and higher productivity as the main contributors
to poverty reduction.” (p. 4)
• International remittances, and also decline in population
growth and fall in the dependency ratios also contributed
significantly to poverty reduction in Bangladesh.
Key Issues & Concerns
• Although the SSN-support has been of particular help to some
needy groups and areas, e.g. poor elderly, destitute women
and the poverty-stricken parts, the programme is still low in
coverage and size. Also, day labourers and beggars, among
others, are also found to be left out.
• As strongly argued by the World Bank (2006), Bangladesh
seems to spend somewhat below the norm (less than 2% of
GDP) – as compared to 2% for Africa and close to 5% for
South Asia. (The serious resource constraint faced by the Govt
in Bangladesh is, understandably, a major hindrance.)
• There are also a number of other concerns (see below).
Key Issues & Concerns (cont’d)
• A major concern relates to the deficiency in administration of
the SSN programmes. Some 30 or so Government Ministries
are reported to be involved, and without any inter-Ministerial
• Also, at times various Government and non-Government
agencies are found to be working without any coordination.
• “Leakages” are frequently reported, and in some programmes
as high as 26% (GOB, 6th Five Year Plan, Part 1, p.168).
• Hence the need for improving the administrative capacity and,
in particular, involving central co-ordination, thus institution
building demanding a serious attention (World Bank, 2010).
Concluding Remarks
• The role of public transfers via SSN programmes in attacking extreme
poverty, though found negligible, needs to be viewed in a special context
because of the critical benefit they often provide, and also that SSNs “are
important components of any comprehensive poverty alleviation strategy.”
(Mukherjee and Kundu 2012, p.81).
• Related to the above, the removal of poverty especially of those with
handicaps and also in deprived areas is likely to remain a challenging issue.
Hence the need for a highly co-ordinated approach by strengthening the
SSN programmes carried out by the Government.
• The concern for poverty alleviation is mainly an issue of income
redistribution and the government will be able to perform this in a
comprehensive way only when a country has succeeded in raising the
capacity of its state, with (a) enough allocation as a percentage of GDP and
(b) an organisational set up to administer the programme efficiently.
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