Record social security budget faces tough test as structural flaws threaten impact

The government's record Tk 1,44,338 crore allocation for social security in the 2026-27 national budget has reinforced its commitment to protecting millions of poor, marginalised and vulnerable people. 

Yet, despite the unprecedented spending�"equivalent to 15.39 per cent of the national budget and 2.11 per cent of GDP�"official assessments and policy experts warn that deep-rooted structural weaknesses could significantly undermine its effectiveness.

The budget introduces several flagship initiatives, including the Family Card, Farmer Card, Unemployed Workers' Allowance and a universal stipend for religious leaders, alongside expanded cash and food assistance programmes. 

However, analysts say increasing allocations alone will not guarantee better outcomes unless longstanding governance and implementation challenges are addressed.

One of the biggest obstacles remains the fragmented nature of Bangladesh's social protection system. At present, 90 separate programmes are administered by 25 ministries and agencies, resulting in overlapping responsibilities, duplication of beneficiaries, weak institutional coordination and inefficient use of public resources. As a result, thousands of genuinely poor families continue to be excluded from government support, while some ineligible recipients continue to receive benefits.

Targeting errors remain another major concern. The absence of a comprehensive and transparent beneficiary selection mechanism has led to both inclusion and exclusion errors, allowing non-poor households to benefit while many deserving families remain outside the safety net. An estimated 62 million people living just above the poverty line remain highly vulnerable to inflation, job losses and economic shocks, yet many fall outside existing eligibility criteria.

The labour market presents an equally formidable challenge. Nearly 85 per cent of Bangladesh's workforce is employed in the informal sector without access to pensions, unemployment insurance or contributory social protection. Although the budget introduces an unemployment allowance, the programme will initially cover only 15,000 workers, leaving millions of informal workers without any income protection during economic hardship.

The government has expanded several existing welfare programmes. The old-age allowance will now cover 62 lakh beneficiaries, widow allowances 29 lakh, disability allowances 38 lakh, while the Food Support Programme has been extended to 60 lakh families. Even so, officials acknowledge that persistently high inflation has significantly eroded the real value of cash transfers, reducing their ability to offset rising living costs.

A recent study by the Bangladesh University of Engineering and Technology (BUET) also highlights a widening urban protection gap, noting that most social protection schemes continue to focus on rural communities despite rapidly increasing poverty and vulnerability in urban areas.

Meanwhile, demographic changes are expected to place further pressure on the welfare system. Bangladesh's population aged 60 years and above is projected to reach 30 million by 2041, requiring a substantial expansion of old-age support and healthcare services.

Marginalised groups continue to face distinct challenges. Persons with disabilities receive a uniform allowance regardless of the severity of their condition, while only a limited number of programmes specifically address their diverse needs. Indigenous communities also continue to struggle with land disputes, language barriers and the absence of disaggregated data, making it difficult to determine whether government support is reaching minority populations effectively.

Implementation remains another critical concern. Bangladesh's tax-to-GDP ratio, still below 8 per cent, raises questions over the long-term sustainability of expanding welfare programmes. At the same time, the latest implementation rate of development expenditure stood at only 40.7 per cent, highlighting persistent weaknesses in programme execution. Analysts also warn that greater reliance on digital payment systems could unintentionally exclude elderly people, remote communities and citizens with limited digital access.

Eminent economist and CPD Distinguished Fellow Professor Mustafizur Rahman said the success of the expanded social protection programme would depend not merely on higher budgetary allocations but on ensuring that benefits reached the right people.

"Social security programmes for disadvantaged and vulnerable people are essential, but the biggest challenge lies in ensuring proper inclusion and exclusion of beneficiaries," he told the Daily Observer.

He recommended implementing initiatives such as the Family Card and Farmer Card through a Digital Social Registry to improve transparency, strengthen coordination among agencies and ensure that assistance reaches intended recipients without duplication.

Professor Mustafizur also recalled that the National Social Security Strategy, adopted in 2015, had set a target of gradually increasing social protection spending to 3 per cent of GDP. He stressed that achieving this objective would require stronger coordination among ministries, improved governance and greater involvement of local administrations to ensure effective implementation and maximise the impact of public spending.