Balancing with inflation: BISP beneficiaries’ stipend increased by Rs66 per month

Comes after UK’s body conditioned £60 million grant on cash increment

ISLAMABAD:

The government on Saturday nominally increased the monthly cash stipend for Benazir Income Support Programme (BISP) beneficiaries, taking it from Rs1,500 to Rs1,566 per month,  to qualify for a grant of £60 million by Department for International Development (DFID) of the United Kingdom.

The government increased the stipend with effect from July 2015, announced Ministry of Finance on Saturday.

With the addition, the annual stipend of a beneficiary will increase from Rs18,000 to Rs18,800, 4.44% higher.

The amount is in stark contrast to the increase in prices of perishable food items that have become much more expensive in comparison.

The Finance Ministry stated that the increase was in line with inflation rate for last fiscal year 2014-15. The increase has been given with effect from July last year and the government would pay the arrears to roughly 5.1 million beneficiaries along with the next tranche, said the Finance Ministry.

The government disburses the cash stipend in quarterly tranches among 5.1 million beneficiaries under the social safety net programme, initiated by the previous government in 2008.

With the fresh increase, the amount of quarterly tranche will come to Rs4,700 per beneficiary, which is up by Rs200 on quarterly basis.

“The decision would contribute to mitigating the effect of inflation on the BISP beneficiaries,” Finance Minister Ishaq Dar was quoted as saying in the official handout.

However, at the time of the budget, Finance Minister had refused to increase the monthly stipend of the poorest strata and argued that the government would instead add 400,000 more beneficiaries in the list of those who were receiving official assistance.

Dar had to change his mind after the DFID linked the disbursement of grant of £60 million with increase in cash stipend, said officials familiar with the matter.

The UK’s condition was that increase in BISP cash stipend should be linked with inflation measured by the Consumer Price Index aimed at protecting the poorest, they added.

The £60m grant

After the increase in stipend, the UK is expected to disburse the grant amount in April. Last year, the UK had also given grant for the BISP. UK taxpayers have been partially financing the social safety net programme since its inception.  They will also pay the additional annual cost of Rs4 billion on account of Rs66 per month per beneficiary increase.

“The present government is fully committed to protecting the most vulnerable segments of the society and  for this purpose the annual allocation for BISP has been enhanced by the present government from Rs40 billion to Rs105 billion,” said Dar. He further said that the annual stipends had been enhanced from Rs12,000 in 2013 to Rs18,800.

During first six months of the current fiscal year, the government has disbursed Rs46 billion among BISP beneficiaries. The International Monetary Fund has also imposed a condition under its $6.2 billion programme to keep track of the spending under the social safety net programme.

A recent report of the IMF stated that the BISP programme coverage would increase from 5.14 million beneficiaries to 5.3 million by the end of current fiscal year. The report also noted that Pakistan was in the process of securing support from development partners to protect the real purchasing power of cash transfers.

The federal government, in partnership with the provincial governments, has also rolled out education-conditional cash transfers covering over 70,000 children, out of which 48% of them are girls, in 32 districts.

Published in The Express Tribune, February 14^th, 2016.

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