New poor need cash support more: Economists

Social security should get more priority in the coming budget than ever before as the Covid-19 pandemic-induced shutdown has already forced millions into poverty afresh and exposed many more to vulnerability, economists have told a discussion organised by The Business Standard.

The novel coronavirus has brought forth the distinction between poor and non-poor and if the social security sector is only designed considering the poor, it will limit the desired benefit from the scheme, they pointed out.

They preferred cash support to be delivered directly through mobile financing to the new poor – both urban and rural – based on a reliable list of targeted people.

The videoconference on "expanding social protection: Protecting livelihoods" was the fifth of the series launched by the newspaper to identify the key priorities for the national budget in the backdrop of the pandemic that rattled both economy and public health.

Senior Research Fellow of the Bangladesh Institute of Development Studies (BIDS) Dr Monzur Hossain, Dhaka University's Professor of Economics Dr Sayema Haque Bidisha and Associate Professor of Economics Dr Antonu Rabbani discussed the enhanced need for social protection and the effective modes to reach the targeted people.

Former lead economist of the World Bank's Dhaka office Dr Zahid Hussain moderated the discussion, initiated by The Business Standard Executive Editor Sharier Khan.

Dr Zahid Hussain said the issue of social security is discussed every year before and after the budget and the Covid-19 crisis has added a new challenge to it.

"Social distancing will not be effective if social protection does not stand by it," he said. Dr Zahid pointed out that the challenges in the social security sector like lack of funds and transparency in distribution, problems in targeting because of inclusion and exclusion errors, and overlapping by different organisations and ministries involved in the implementation process.

Dr Sayema Haque Bidisha has said the upper poverty population fell to 20 percent in 2019 from 24.3 in 2016. "Updating the poverty line in the present situation, we found that the number could be around 40 percent, i.e., the number could be doubled," she said, referring to an analysis of the present crisis to figure out the people who would be reduced to new poor because of coronavirus.

"We found that around 9 percent people are being added with the number of food poverty. And in terms of vulnerability, we saw that the number increased to 30 to 35 percent from 20 percent," she said.

Around 85 percent of our labour force is in the informal sector and they are in a risky zone, Prof Bidisha pointed out.

A big number of people living in different economically risky areas of the country, such as the haors, the hill tracts etc. are slipping into poverty, but no national database is there to identify these new poor, she added.

"They could be lifted back to their position in three or six months, but definitely they are poor now. We have to find a way to identify them," the Dhaka University professor said, suggesting digitalisation of the national social security programme and region-based programmes for informal sector labourers.

Dr Monzur Hossain said the whole scenario now is different from the pre-Covid-19 crisis as the group of targeted beneficiaries has become broader with people losing jobs in SMEs.

"In the current situation, not only the poor, but also the middle and lower-middle class people are also facing problems and in need for protection," he pointed out.

There are 10-20 percent more people who are also in a vulnerable situation and taken together with new poor, around 60 percent of the population is eligible for this entitlement support, the BIDS senior research fellow felt.

He referred to weakness in the delivery system that delayed the implementation of the government's  cash incentive scheme of Tk2,500 each for 50 lakh families each.

I think a broader plan could be done for this budget… So, if you can make a plan based on the people living below and slightly above the poverty line and make a list, that can be helpful," he said.

Dr Monzur Hossain stressed the necessity of decentralisation and felt that transmission would have been limited had only Dhaka been locked down much earlier.

Dr Atonu Rabbani felt that the issue of social safety-net should be seen from a different perspective. "Forget about new poor or old poor or formal-informal divisions…Or we could go to a universal method that everyone will be eligible for support, maybe there will be some inclusion errors," he said.

A more data-driven comprehensive infrastructure can be developed in the next two months with the participation of statisticians, biologists, economists and clinicians, suggested Dr Atonu, who teaches economics at Dhaka University.

The economists gave their opinions on the modes of support- cash-based or food-based.

Dr Zahid Hussain said cash-based intervention has been prioritised the most in many countries to address the vulnerability after the coronavirus outbreak.

Dr Monzur said food support was preferred during the 'lockdown.'

"Now as we have relaxed the lockdown, I think, cash support should get the priority," he added.

Dr Atonu said cash support has an advantage if it directly reaches the target group through mobile wallets.

Dr Bidisha preferred cash support, which she said, offers two important benefits – the multiplier effect or where the money is being spent, and the issue of choice.

"We should transfer cash to those who can access that through mobile financial services," she said.