Expenditure on Social Sector vis-à-vis Public Spending: An Assessment

Economic Trend NGO News Report :: The Unnayan Onneshan (UO), an independent multidisciplinary think tank, in its March issue of Bangladesh Economic Update 2015 reveals that the allocations of public spending for education, health, social security and welfare, and housing as percentage of total programme expenditure have been on the decline in recent years in Bangladesh.

The UO cautions that if the declining trend in the allocations of public spending for social sectors continues, social developments, for which Bangladesh has been commended worldwide, will be unsustainable in the coming years posing serious challenges to the government’s responsibility to provide public services to society as defined by the social contract – the constitution – between the state and the citizens.

Assessing the states of different countries’ public spending on social sectors and the trends in their social developments, the think tank finds that Bangladesh lags far behind other developing countries in accumulating public spending adequately to invest in social sectors and provide its citizens with necessary social services.

The research organisation shows that in 2013, the public spending stood at 32.21 percent of GDP in the developing and emerging economies, whereas Bangladesh accumulated only 16.79 percent of its GDP as public spending. The volume of public spending is far lower in Bangladesh than in its two neighboring countries – India and Myanmar, whose public spending as percentage of GDP reached 27.26 percent and 27.18 percent respectively in 2013.

Pointing at the recent decline in the allocations of public spending on education, the UO evinces that the actual allocations as percentage of the total program expenditure for education and technology were 17.1 percent, 16.9 percent, 18.6 percent, 18.4 percent, 16.6 percent, and 16.1 percent in FY08, FY09, FY10, FY11, FY12, and FY13 respectively. In FY14, the revised allocation stood at 16.3 percent, whereas in FY15, the budgeted allocation stood at 15.6 percent. Projection says that the allocations may stand at 15.5 and 15.6 percent in FY16 and FY17 respectively.

Opining that the allocations of government spending on health are unsatisfactory, the research organisation demonstrates that the actual allocations for health as percentage of the total programmme expenditure were 7.2 percent, 7.1 percent, 7.3 percent, 7.1 percent, 6.6 percent, and 6.4 percent in FY08, FY09, FY10, FY11, FY12, and FY13 respectively. In FY14, the revised allocation stood at 5.7 percent, whereas in FY15, the budgeted allocation stood at 5.3 percent. Projection suggests that the allocations may stand at 5.3 and 5.4 percent in FY16 and FY17 respectively.

Considering the public spending on social security and welfare inadequate, the think tank shows that the actual allocations as percentage of the total programme expenditure for social security and welfare were 5.5 percent, 11 percent, 8.1 percent, 7.6 percent, 7.8 percent, and 7.5 percent in FY08, FY09, FY10, FY11, FY12, and FY13 respectively. In FY14, the revised allocation stood at 7.1 percent, whereas in FY15, the budgeted allocation stood at 7.3 percent. Projection reveals that the allocations may further decline and stand at 6.9 percent in both FY16 and FY17.

Pointing at the stagnant allocations of government spending on housing over the years, the UO evinces that the actual allocations as percentage of the total programme expenditure for housing were 1.2 percent, 1.9 percent, 1.5 percent, 1.3 percent, 1.2 percent, and 1 percent in FY08, FY09, FY10, FY11, FY12, and FY13 respectively. Both the revised allocation in FY14 and budgeted allocation in FY15 stood at 1 percent.

Taking account of the current state of public spending on social sectors and the absence of an effective social security system, the research organisation calls for a thorough reexamination of the current social policies and urges for undertaking prudent reform measures that would enhance institutional capacities and make the social policies work effectively.

The UO further emphasises that the government must focus on raising public expenditure through increased collection of revenue to allocate sufficient resources for social sectors and developing an efficacious social security system in order to empower the citizens particularly the poor and marginalised population of the country.

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