MISDIRECTED BISP: A DRAIN ON PUBLIC MONEY

TARIQ AHMED SAEEDI
(feedback@pgeconomist.com)

Feb 20 - 26, 20
12

Under the suspended stand-by arrangement programme of international monetary fund (IMF), Pakistan's government had to take various economic reforms in order to prove that it would stay afloat to repay the loan acquired from the Fund. Although the programme was stopped before Pakistan could receive remaining $3.7 billion of $11.3 billion stand-by arrangement (SBA), the government had already taken some initiatives including the conditioned improvement of the social safety net including Zakat, Baitulmal, and Benazir income support programme.

There are many pros associated with the government's commencement of the income support programme it started for the most vulnerable segments of the society in a bid to strengthen the social safety net. Proponents of the Benazir income support programme (BISP) said the donations are helping the poor people living on subsistence in the country to withstand the vagaries of life. Arguments against it abound drawing bases on solid reasons however.

One of them is that a paltry sum that is doled out to poor in the name of income support is not sufficient to meet the rising household expenditures. Secondly, critics said donations would do much harm than good to keep underprivileged economically empowered and independent. Instead of keeping them at the receiving end of some so-called monetary benefits, the government should primarily do something to create job opportunities for the unemployed.

Pakistan sees addition of two million new labours in the workforce every year. With the current growth rate that is two to three per cent, it is very difficult to generate employment opportunities for the burgeoning workforce. Experts said the country needs seven to eight percent growth rate to accommodate the labours. The efforts should be redirected to improve the economic conditions. Employment generation on fast track basis can only deal with the monstrous issue manifesting itself in social disruption and law and order problems around the country.

Under the BISP, the government is distributing meagre Rs1,000 per month to a vulnerable family. In 2008-09, when the programme was introduced, total Rs34 billion was set aside to extend the financial assistance to 3.5 million families. Actual spending during that fiscal year was recorded at about Rs14 billion. For 2009-10, the allocation was raised to staggering Rs70 billion for five million families, but released amount could hardly reach Rs32 billion. Again in the following year, Rs35 billion could find a way out from the national resource pool in contrast to the budgetary allocation of Rs50 billion. The ongoing fiscal year is said to have the allocation equal to the last year's. Total spending until last fiscal came roughly at Rs96 billion. This is really a huge amount for an economy that is facing a wide fiscal deficit, and however makes one rightly anticipate positive impact of it on reduction of poverty incidence. In contrast, poverty is increasing because of the unabated rise in prices of essential commodities. According to an estimate, 40 per cent of the country's population is living below the poverty line. On one hand, the donations are dealt out to people and environment is being created to make them useless.

The government is constantly raising the electricity and gas tariffs and domestic prices of the main petroleum products, making it difficult for even the middle income group to survive let alone people earning scanty Rs5,000 per month, targeted segment of BISP. In addition, disastrous impact of floods on rural population that is the prime recipient of government allowances, offset whatever little positives income supports could bring about.

Income support programme was aimed at to supplement the monthly incomes of a quarter of population living below the poverty line. A monthly disbursement is capable enough to buy two or three weeks flour for a family. IMF insisted on adequate spending in this regard.

Pakistan rejoined the IMF's programme back in 2008 when the country's foreign reserves plunged to the dangerous level of six billion dollar. The Washington-based Fund sanctioned total $11.3 billion with strict conditionalities. On Pakistan's failure to take certain reforms related to power sector and tax system, the Fund stopped release of two tranches of the sanctioned loan.

Questions are raised over the appropriate outreach of financial assistances. NADRA's records are being used to find out the targeted families while amount is said to be transferred to woman family member. According to a report, only two third of them got computerised national identification cards, thereby automatically striking out a sizeable portions from the list of deserving recipients. The similar problem is raising its head in case of distribution of Pakistan Cards. Nadra is said to lack the facility to get the national identity cards of women computerised. Old ID cards create serious issues in transference of donations to the flood-affected people.

There are also reports emerging about the misappropriation of the funds meant for the deserving families and flood victims. Like other things, the social safety net could also not save it from the pollutions of political influence. Critics are openly blaming the authorities for showing biasness in transference of donations and exploiting BISP as vehicle of gaining political mileage and expanding vote banks.