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BISP and inflation

April 24, 2012

AN otherwise laudable scheme, the Benazir Income Support Programme has fallen victim to inflation, especially where food prices are concerned. As a report by the World Bank points out, the high rate of inflation has reduced the benefit of the programme for recipients by 25 per cent. Launched in 2008, the BISP programme was allocated Rs34bn and is helping about five million people, with a family that falls in the category of ‘the poorest of the poor’ receiving Rs1,000 per month. However, the high rate of inflation has taken away part of the benefit to the poor. In 2009, the Consumer Price Index rose by 13.6 per cent and by another 13.4 the following year. While reliable statistics are not fully available for 2011, the real value of the support must have declined to more than Rs750. Yet, the World Bank says, no adjustment has been made in payments under the BISP to offset the inflationary bite.

The observations, made in a project paper submitted to the bank’s executive directors, seek another $150m for the programme. However, there is scepticism about its continued viability because of soaring inflation in the country. Yet interestingly, the paper recommends linking the BISP to the Waseela-i-Taaleem programme and cash transfers to encourage primary education. This way the total support could go up to Rs1,600 for families that have more than two children. The report says that the number of beneficiaries could go up to seven million. The government ought to seriously consider the recommendations of the World Bank experts and increase the support money to offset inflationary pressures. As pointed out by the paper, if the programme is properly organised and administered and there is transparency about the scheme, the BISP and other poverty-alleviation programmes could help the government reduce price subsidies on wheat and power.