BM Desk : Economists and development specialists are concerned about the direction of budgetary priorities when the government drastically reduced the amount allotted for poverty reduction in the proposed national budget for FY2025-26, despite growing economic strains on low-income households.
The initial budget for the previous fiscal year included Tk 4.61 trillion for poverty reduction; this is reduced to Tk 4.48 trillion in the proposed budget.
According to a Finance Division summary headed “Poverty Reducing Expenditure,” poverty-focused spending as a percentage of the overall budget has dropped from 57.9 percent to 56.77 percent.
This is a nominal cut of Tk 129.94 billion in poverty-related resources in a single fiscal year, expressed in absolute terms. The budget share has decreased by 1.13 percentage points annually.
A long-term perspective reveals an even more alarming trend. The updated budget for FY 2023-24 has earmarked Tk 4.33 trillion, which constitutes 60.66 percent of the total expenditure, for poverty alleviation.
Over a span of just two years, the proportion of spending dedicated to poverty has decreased by 3.89 percentage points, indicating what many perceive as a diminishing focus on poverty reduction policies.
Economists caution that this change occurs at a particularly precarious moment. With inflation remaining persistently high, investment levels weak, and employment recovery sluggish, lower-income groups are facing mounting pressure.
However, the new budget seems to cut back, rather than enhance, the fiscal assistance directed towards these groups.
“It is disappointing that the budget announced during a time of high inflation and a downturn in investment and employment has decreased rather than increased support for the poor, failing to meet the growing demand for expanded benefits to safeguard vulnerable populations,” stated Dr. Mustafa K. Mujeri, former Director General of the Bangladesh Institute of Development Studies (BIDS).
He raised concerns that a significant portion of the allocated funds may not reach the intended recipients due to inefficiencies in targeting and execution.
He stressed the importance of providing more direct assistance to the poor through social safety nets, including cash transfers and subsidized food distribution.
The national budget for FY 2025-26, presented by Finance Advisor Dr. Salehuddin Ahmed on June 2, proposes Tk 3.01 trillion for direct poverty reduction efforts, accounting for 38.10 percent of the total budget, alongside Tk 1.47 trillion (18.66 percent) for indirect spending that could impact poverty alleviation.
This represents a decrease from the previous year’s original budget, where the shares for direct and indirect poverty reduction were 38.88 percent and 19.02 percent, respectively.
According to the Finance Division, Tk 2.84 trillion, which is 53.06 percent of the Tk 5.35 trillion operating budget, is categorized as poverty-reducing expenditure. Additionally, Tk 1.63 trillion, or 66.46 percent of the Tk 2.46 trillion development budget, falls under the same classification.
Budget documents indicate that the Ministry of Food will receive the highest proportion of its allocation aimed at poverty reduction, at 98.01 percent, followed by the Bridges Division at 94.04 percent and the Statistics and Informatics Division at 90.44 percent.
Other notable ministries include the Ministry of Disaster Management and Relief at 88.43 percent, the Ministry of Railways at 87.66 percent, and the Ministry of Primary and Mass Education at 87.22 percent.
Conversely, several government institutions exhibit minimal or no allocations focused on poverty. The President’s Office and the Office of the Comptroller and Auditor General received zero percent, while the National Parliament received a mere 0.25 percent.
Other agencies with low rankings include the Supreme Court of Bangladesh, the Economic Relations Division, and the Anti-Corruption Commission.
Dr. Selim Raihan, a Professor of Economics at Dhaka University and Executive Director of the South Asian Network on Economic Modeling (SANEM), expressed strong criticism regarding the classification itself.
He asked, “Who is this report supposed to please?” and described the classification of poverty-reduction as “arbitrary and ad hoc.”
He said that while larger development investments are important, they shouldn’t be bundled together without a clear methodological rationale. Only well-targeted social safety programs can truly be considered as direct poverty reduction.
Furthermore, Raihan underlined that recent economic progress has not resulted in a corresponding rise in income and that poverty rates have not decreased as anticipated.
He warned that the budget runs the risk of failing the same people it is meant to help if poverty spending is not reorganized and more precisely targeted.
