Macroeconomic Implications of Social Safety Nets in the Context of Bangladesh

Social safety net is a measure taken by the government in order to prevent the vulnerable section of its population to fall beyond a certain level of poverty. Social safety net programmes (SSNPs) are designed with the aim to provide support for the vulnerable section of the society. With a vision to prevent transmission of poverty from generation to generation, the safety net programs opt for a more efficient society in terms of the choices made by individuals. The Social safety nets play both a redistributive and a productive role supporting moral philosophy as well as managing risks. These two are the major pillars that justify the existence of safety net programs. It should be mentioned at the outset that the safety net programs create a path towards poverty reduction in the long run. They do not reduce poverty directly, rather, these programs tend to reduce transitional poverty through ensuring proper nutritional intake, education, health care etc. In other words, the safety net programs are methods through which poverty is expected to fall through investment in human capital.

With about 40 per cent of its population living below the poverty line and an increasing number of population being added below the lower poverty line, safety net programs in Bangladesh are more than a necessary element in fighting poverty. The government has been following a combination of direct and indirect safety net programs for poverty eradication addressing both human and income poverty. However, despite having a large number of programs under the safety net, the rate of poverty reduction has not been satisfactory. It is thus crucial to scrutinize the impact of the existing safety net programs on poverty reduction in Bangladesh and identify the kind of programs that would be more suitable to the socio-economic condition of the country.

This paper however, does not go into detailed evaluation on which of the various types of safety net programs have been successful in Bangladesh. Rather it looks at the overall structure of SSNPs in Bangladesh and their poverty impact. Initially the paper discusses a number of SSNPs that have been considered to be successful in other countries of the world and highlights the current scenario of Bangladesh. The major objective of the study is to look into the overall impact of the existing safety net programs on poverty reduction in Bangladesh. The paper also looks into the impact of the existing safety net programs on reducing inequality. In the final section, the study provides a number of policy suggestions on design, target and coverage of the existing safety net programs. 

Click on the image to view