Policy-Paper-Benazir-Income-Support-Programe1 by nuhman10

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									        Policy Paper: Benazir Income
              Support Programe:
          From Social Safety Net to
       Political Cohesion, Stability and
               Peace in Pakistan

Chairperson of BISP giving out Beneficiary Identification Form to a poor Woman.

                              By Riffat Sardar
          Child & Adolescent Protection Specialist, UNICEF Pakistan

                                  Maastricht School of Governance

                                                       June 2009

                                        Table of Contents

MAP ................................................................................................................................ 3
Executive Summary: ....................................................................................................... 4
Pakistan Macro-Economic Context: ............................................................................... 5
Shocks Experienced by Poor People............................................................................... 6
Overview of Social Protection in Pakistan ..................................................................... 7
The Social Protection Strategy........................................................................................ 8
The New Benazir Income Support Programme .............................................................. 8
Use of Technology to eliminate Inclusion and Exclusion Error: .................................... 9
Disbursement of Cash Assistance: ................................................................................ 10
Institutional and Implementation Arrangements .......................................................... 10
Pre-Scorecard Targetting: ............................................................................................. 11
Score-card Targetting: .................................................................................................. 12
Evidence-based Policy Recommendation ..................................................................... 13
Justifications for Proposed Policy Recommendation: .................................................. 14


Executive Summary:

This paper analyses the Benazir Income Support Programme, Pakistan’s Social
Protection Programme , a cash transfer programme for families targeting poor
women, and analyses how it is designed to contribute to poverty reduction and
the improved well-being of women and children with particular reference to
MDGs 1. The paper reviews the present macro economic context in Pakistan.
Pakistan’s economic situation was better in the first part of this decade. However
in 2007/08, with the sharp rise in international oil and food, along with a
deteriorating security situation and internal political turmoil, Pakistan was faced
with rapidly expanding macroeconomic imbalances. The fiscal deficit increased
to 7.4%; there was a decline in investment rate, rise in unemployment and
poverty, higher current account deficit, rising debt burden, a loss of foreign
exchange reserves, higher inflation, and rise in interest rate. Recently the
Government announced that that as per World Bank estimates, the poverty in
Pakistan increased to 40% and every second citizen was living below the poverty
line. The paper then reviews the Social Protection Programme which though 13%
of the PRSP, is not necessarily reaching the poor. The paper explores whether
the social safety net programmes that exist have the capacity to respond to
shocks experienced by vulnerable poor people. Pakistan Social Protection
report, the earthquake emergency and the recently IDPs situation clearly
demonstrate that the Govt through the safety net programmes does not have the
capacity to respond to idiosyncratic or aggregate shocks. The paper explains the
design of the Benazir Income Support Programme as it is initiated. The paper
finds that the pre-scorecard targeting that was employed by the Government,
which entailed identification of the beneficiaries through the parliamentarians was
highly criticized in the media as politicized and non-transparent. The paper then
reviews the poverty scorecard targeting that has been proposed by the World
Bank, and will be rolled out initially in 16 districts of the country. The paper
reviews the current security situation in the country as it is poses a substantial
risk to the BISP itself.        Based on the evidence, it makes the policy
recommendation of change the targeting methodology to categorical targeting
focusing on the women IDPs and the geographic areas where the military
operations were conducted. The paper analyses the justification for the inclusion
of the IDPs in the targeting criteria, primarily because the IDPs are in ultra povery
because the Humanitarian Response Plan thus far has only received 26% of the
funding, which makes the funding situation very precarious. In the meantime the
sense of helplessness among the IDPs is mounting and the dissatisfaction with
the Government is increasing. The situation could become more volatile if the
more than 2 million IDPs protest and attack the Government establishments, This
could potentially destabilize the Government. If the Government channel the
BISP support to the IDPs, it could placate them, and in the longer term may even
contribute to the popularity of the PPP Government, causing stability to the
Government and peace in the region.

    Pakistan Macro-Economic Context:

Pakistan’s development record was strong during the first part of this decade.
The economy grew at 7.3 percent on average per year during 2003/04 through
2006/07, driven by solid performances in the services and industrial sectors.
This growth translated into rising household incomes, with per capita income
growing to US$878 in 2006/07, an 18.3 percent increase from US$742 two years
                                                          Figure 8. Poverty headcount rate in Pakistan, 1987/88-2005/06
However in 2007/08, with the sharp                                        (percent of population)
rise in international oil and food
(specifically wheat) prices, along
with a deteriorating security            30
situation and internal political         25
turmoil, Pakistan was faced with         20

rapidly expanding macroeconomic          15

imbalances. Both fiscal and              10
current account balances widened          0
significantly, and the economy                1987-88 1990-91 1992-93 1993-94 1996-97 1998-99 2001-02 2004-05             2005-06

begun to adjust through a                Source Pakistan Economic Surveys, various years.

slowdown in growth and rising
inflation. The fiscal deficit increased to 7.4% as against the target of 4%1.
                                                                            Overall there was a
                                                                            decline in investment
                                                                            rate, rise in
                                                                            unemployment and
                                                                            poverty, higher current
                                                                            account deficit, rising
                                                                            debt burden, a loss of
                                                                            foreign exchange
                                                                            reserves, higher
                                                                            inflation, and rise in
                                                                            interest rate. Recently
                                                                            the Government
                                                                            announced that that as
                                                                            per World Bank
                                                                            estimates, the poverty
                                                                            in Pakistan increased
                                                                            to 40% and every

    “Fiscal Policy Statement, 2008-09”, Govt of Pakistan, page 7.

second citizen was living below the poverty line.2 It was in this background that
the Government launched the Benazir Income Support Programme, as a social
safety net to protect the poor from economic shocks.

Shocks Experienced by Poor People

Do the current safety net programs that exist have the ability to respond to with
shocks experienced by poor families? The Pakistan Social Protection report3
provides some insights into the specific shocks that affect households and
household risk coping strategies. The report found that nearly two-thirds of safety
net applicants and recipients (about 80 percent of whom were poor) surveyed
suffered from one or more major shocks in three years before the survey,
comprising both idiosyncratic (health, unemployment) and aggregate shocks
(economic and natural disasters). While income shocks imposed major costs on
all affected households, the poor were the hardest hit (cost of the shock as a
share of annual household consumption for the poor was twice that for non-poor
households). Nearly 33 percent of these households lowered their food intake, 10
percent put a child to work, and 8 percent pulled a child out of school in response
to the shock. These results reveal that socio-economic vulnerabilities and income
shocks at the household level are a reality and can both impoverish households
at the time of the shock and if not timely assisted by the Government can also
perpetuate poverty to the next generation.

More significantly however, the recent earthquake in 2005 exposed the gap in
the ability of the government to cope with natural disasters. Since no safety net
structure existed that could be rolled out quickly, interventions had to be
designed from scratch. The final relief package combined short-term income
support (cash support) with long-term aid for reconstruction (housing).

Currently there are more than 2 million Internally Displaced Persons (IDPs) in
Pakistan because of the military operations that are going on in the areas
bordering Afghanistan. While the Government along with the international
community is trying to provide relief and early recovery assistance, there is a
huge shortfall of funds amounting to 74% of the Humanitarian Response Plan.
While the Government has announced a short-term income support (cash
support) of $312 per family, but actual disbursement has not taken place. There
are no social safety net that can respond to the present humanitarian crisis.

    “Poverty Swells to 40pc”, The News, May 8, 2009
   World Bank (2007), These results presented in the report are from a representative sample of safety net
recipients/applicants collected in 2005, and are therefore not nationally representative. The sample is predominantly
poor. Over half of the sampled households (54 percent) are ultra poor (those with consumption below the food poverty
line), about a quarter (23 percent) are poor (between the food and national poverty lines), while the remaining were

Overview of Social Protection in Pakistan

Pakistan’s social protection programs comprise safety nets, social security,
employment promotion and protection. Pakistan’s safety net system includes
three main federal cash transfer programs (Zakat, the Food Support Program
(FSP)), and the recently established (2008) Benazir Income Support Programme
(BISP). There are some other small, scattered programs that provide social
welfare and care services to persons with disabilities, child laborers, and others.
To address aggregate economic (price) shocks, till recently, Pakistan relied
primarily on a wheat subsidy program. There are several employment promotion
programs, e.g., micro credit programs and skills and training. Employment
protection institutions (e.g., labor laws) cover workers in the formal sector.
Pakistan’s social security system offers pension (old age, survivor and disability)
benefits to formal sector workers. Public sector workers are provided civil
service pensions, while private sector workers have access to pensions from the
Employees Old Age Benefits (EOB), but also provincially based pension and
non-pension programs such as the Workers Welfare Fund (WWF) and the
Employees’ Social Security Institutions (ESSI).

During the last four years, the overall social protection expenditures have
fluctuated as a share of total PRSP/pro-poor expenditures. Specifically,
expenditures pertaining to social protection (food subsidies, Bait-ul-Mal, Tawana
school meals, social security, and low cost housing) remained between 3-4
percent of total PRSP spending between 2004/05 till 2006/07 but then sharply
increased to 13.4 percent of total PRSP spending in 2007/08 (Table below). This
increase in social protection expenditures were largely due to the increased
spending on food subsidies and social security, both of which are likely not well
targeted to the poor.

                                       PRSP Budgetary Expenditures

                                                                Expenditures (Rs million)
                   Sectors                      2004/05         2005/06          2006/07         2007/08
Social Security                                      2,030            7,575           4,513          18,942
Low cost housing                                      318              305              299            597
Food Support Programme                               2,703            3,081           3,458           4,370
Tawana                                                    78                -               20        1,420
Food Subsidies                                      5,359            6,021            5,455         54,872
Total PRSP Expenditures                           327,683          390,970          445,414        600,605

Social Protection/Total PRSP Expenditures (%)             3.2             4.3              3.1         13.4
Source: PRSP-2, Finance Division, Government of Pakistan (2009)

The Social Protection Strategy

In order to strengthen the social protection sector, the Government of Pakistan,
with support from the World Bank and other donors, started a collaborative
process in 2006 to develop “A Social Protection Strategy to Reach the Poor and
the Vulnerable”, which was approved by the Cabinet in June 20074. The Social
Protection Strategy is conceived within the overall framework of “Just and
Balanced Development” envisaged in the Medium Term Development
Framework (2005-10) and Vision 2030.

The Vision of the National Social Protection Strategy is to develop an integrated
and comprehensive social protection system, covering all the population, but
especially the poorest and the most vulnerable. The goals of the strategy are: (i)
to support chronically poor households and protect them against destitution, food
insecurity, exploitation, and social exclusion; (ii) to protect poor and vulnerable
households from the impacts of adverse shocks to their consumption and
wellbeing that, if not mitigated, would push non-poor households into poverty,
and poor households into deeper poverty; and (iii) to promote investment in
human and physical assets, including health, nutrition, and education, by poor
households capable of ensuring their resilience in the medium run and of
interrupting the intergenerational cycle of poverty.

Priority areas of intervention will ensure these goals are met. These were
identified as: (i) reaching the poorest; (ii) addressing the needs of vulnerable
children; (iii) addressing the needs of vulnerable and poor women; (iv) providing
employment and income earning opportunities; (v) protection against
environmental and natural disaster; (vi) improving access to social care services
and shelter; (vii) protection against health shocks; and (viii) protection for workers
in the formal and informal labor markets.

The New Benazir Income Support Programme

Based on deficiencies highlighted in the National Social Protection Strategy
which describes more an intent of the Govt. than a strategy or an implementation
plan, and with the objective to overcome the severe food, fuel and financial crisis
emerging in 2007/08, the Government decided to create a new cash transfer
program, the Benazir Income Support Programme. During the second half of
2008, the Government of Pakistan launched the Benazir Income Support
Programme (BISP) as its new main social safety net program to cushion the
negative effects of the food crisis and inflation on the poor. The Program
provides for cash transfers of Rs.1000 [$12] per month to the eligible families.

 Social Protection Strategy to Reach the Poor and The Vulnerable, Center for Poverty Reduction and
Social Policy Development, Planning Commission, Govt. of Pakistan, Islamabad, June 2007

The budget allocated for BISP for the current fiscal year is Rs.34 billion (about
$420 million), and It is the third largest allocation in the total budget and is 0.3%
of the GDP for the year 2008-09. The Programme is aimed at covering 3.5 million
families which are almost 15% of the entire population, and which constitutes
40% of the population below the poverty line. The administrative cost of the
implementation of the scheme would be 1 to 2 per cent of the total cost of the
scheme. The Govt. of Pakistan intends to expand the budget for the program in
the coming fiscal year 2009/10 to cover around 5 million families with the ultimate
goal over the medium term to expand coverage to 7 million families in 2011. In
reaching 7 million families, it would roughly cover 35 million people or about 22%
of the population. BISP is a national program that covers all provinces of the
country, AJK and Northern Areas.

Use of Technology to eliminate Inclusion and Exclusion Error:

                                         BISP is presently requesting the services
                                         of the National Database and Registration
                                         Authority (NADRA), for the design and
                                         management of the targeting database;
                                         verification of eligible beneficiaries
                                         selected through the targeting process,
                                         and generation of payment lists.The
                                         selection of the recipient is made on the
                                         basis of pre-determined criteria, using
                                         variables available with the NADRA to
                                         identify women from low-income families.
                                         As it is very easy to track a registered
                                         person in the NADRA, therefore the
                                         chances of inclusion error are
                                         automatically minimized, because the
                                         NADRA can easily verify whether the
                                         person has a Government job or receiving
                                         pension from the Government or the
                                         armed forces.

                                        The poor women are main target of this
                                        programme, and as majority of the rural
                                        poor women do not possess the NICs
                                        therefore there is a possibility that they
                                        may not apply and therefore not benefit
from the programme. This will increase the exclusion error in the targeting. On
the other hand, it may force them to get the NICs and thus be registered with the
NADRA. This will also have the unintended effect of contributing to their overall
empowerment, because then these women will also automatically get registered
as voters, and enjoy other benefits such as open up bank accounts.

The Finance Minister, Mr. Naveed Qamar said "It is not possible to ensure 100
per cent transparency in implementing the scheme, but we have ensured that 90
to 92 per cent deserving people would be able to benefit from the scheme." 5

Disbursement of Cash Assistance:

BISP has also signed an agreement with Pakistan Post, which stipulates that
BISP beneficiaries shall be paid through Pakistan Post “Money Order”. This
arrangement was favored keeping in view the vast coverage, easy accessibility
and money handling and delivery capacity of Pakistan Post . Over time, however,
BISP management seeks to investigate alternative payment options using
modern technology such as smartcard or others.

Institutional and Implementation Arrangements

Towards the end of 2008, the Benazir Income Support Programme was
transferred from the Finance Division to the Cabinet Division and a Special
Secretary was appointed along with a National Program Coordinator. Moreover,
the Special Secretary was declared as the Principal Accounting Officer with all
administrative and financial powers as given in the Rules of Business of Pakistan
for Federal Secretary, in charge of a Division. The Special Secretary was later
replaced by the Managing Director enjoying the same powers as of a Federal

Organizational Structure (Federal): BISP is governed by a Management Board
headed by the Chairperson. Currently, the government is preparing a law that
intends to establish BISP as an administratively autonomous safety net authority,
which will specify clear roles and responsibilities of the Board and the
management of BISP. To date, at the federal level, a Managing Director (MD)
along with a Director General (DG) Operations and DG Administration have been
appointed. Moreover, five Regional Directors for all the provinces including
AJK/NA, Director Admin, Director IT, Director Finance & Accounts, Director
Internal Audit and a Deputy Director, Media along with other staff have been

Organizational Structure (Regional): At provincial level, a DG will head each
province including AJK/NA (a total of four DGs, 2 Directors AJK and Northern
Areas). Provincial DGs shall be assisted by 28 Divisional Directors, who shall be
further assisted by 125 Supervisors. So far, all of the DG and Director positions

  Benazir Income Support Programme from Sep: ECC, /The NEWS,Thursday, July 31,
  Project Appraisal Document, Social Safety Net Technical Assistance Project, World
Bank, April 2009.

have been filled, whereas some of the other staff still has to be appointed as the
BISP rolls out its operation.

Pre-Scorecard Targetting:

Available empirical evidence shows that the impact of cash transfer programs on
poverty and inequality is significantly higher when effective and accurate
targeting mechanisms are used. The better the cash transfers are targeted to the
poor, the larger the impact on poverty and human development outcomes. Well-
implemented cash transfer programs are among the most effective programs to
distribute income and benefit the poorest population.7 However In order to
quickly launch the program, The PPP Govt. decided to provide beneficiary forms
to all the elected members of the National and the Provincial Assemblies so that
they could identify and fill out the forms for the intended beneficiaries. According
to the original plan, the Parliamentarians (Members of the National Assembly and
Senators) were supposed to identify 8,000 beneficiary households each on a
prescribed form which collected information on names, national ID card, and
household income. Upon receipt of the completed forms, the National Database
Registration Authority (NADRA) applies the selection/verification filters to finalize
the beneficiary lists. Payments are then made via the post offices and delivered
at the doorstep through money orders to the adult female in the household. A list
of the first 127,000 beneficiaries was provided to the Pakistan Postal Services in
January 2009 and these payments are presently being processed. The
government has now approved 1.5 million beneficiary families, using the pre-
scorecard targeting system and expected to disburse the allocated amount.

The above method of targeting was highly criticized in the media that it too
politicised, centralised, complicated and
non-transparent. There are already
reports of inclusion and exclusion error
and the Govt. has been blamed by the
opposition parties for nepotism and for
including political workers as the
beneficiaries. While in other places, the
party workers of the PPP criticized their
Government of including the opposition
parties in the distribution of beneficiary
forms. “It seems the PPP wants to expand
the practice of awarding development
funds to parliamentarians and keep them
busy in bureaucratic tasks, rather than having them focus on legislation. Already
the PPP district committee in Dera Ismail Khan has criticized the distribution of
BISP forms through a PML-Q Member of National Assembly, with the office
bearers complaining that the party workers have been ignored. They warned that
 Lindert, K., E. Skoufias and J. Shapiro (2006) in Redistributing Income to the Poor and the Rich: Public Transfers in
Latin America and the Caribbean.

such policies could destabilize the party.”8

Score-card Targetting:

In the face of criticism over targeting, the Government in December 2008,
decided to use a scorecard system to identify BISP beneficiaries. A scorecard is
a targeting tool that includes a limited number of simple indicators that correlate
well with poverty along with an intuitive scoring system that helps identify
program eligibility. The scorecard proposed for Pakistan’s BISP has been
developed with support by the World Bank9 and is marked by two main
characteristics – (i) Ease of implementation, and (ii) a “Proxy Means Testing”
approach to improve targeting performance10. It is noteworthy that the proposed
scorecard questionnaire includes only 13 questions. The Roll-out of the
scorecard nationwide is an extensive task. Therefore it was decided that initially
it will be rolled out in 16 districts. This test phase is considered to provide useful
insights and the necessary learning for scaling up the program nationwide. The
scorecard will consider the following criteria for determining the family as poor or

Beneficiary Eligibility Criteria:
The following categories of families are eligible:
a) Possession of CNIC by female applicant/ recipient.
b) Monthly family income is less than Rs.6000/ ($77)
   And subject to conditions (a) and (b).
c) Widowed/ divorced women, without adult male members in the family.
d) Any physically or mentally retarded person(s) in the family.
e) Any family member suffering from a chronic disease.

Ineligibility Criteria:
The following families are ineligible to receive any assistance under the
  a) Where any of the members of the family is in employment of government/
semi-government/ authority/ department or armed forces of Pakistan.
 b) Where any of the members of the family is drawing pension from government/
semi government/authority/department or armed forces of Pakistan.
 c) Where any of the members of the family is receiving any post-retirement
benefits from any government department/ agency.
 d) Where any of the members of the family owns an agriculture land more than
three acres or residential house/ plot of more than eighty square yards (3

  “A Critical Look at BISP” by Riaz Khan, The News, 12th Nov. 2008.
   See Vishwanath, Hou and Yoshida (2009) in “Poverty Scorecard for Pakistan:         A Recommended
Approach for Targeting the Poor”
   See Grosh and Baker (1995) for more details on the Proxy Means Testing approach.

 e) Where any member of the family is receiving income support from any other
source like Punjab Food Support Scheme etc.
 f) Where any member of the family possesses a Machine Readable Passport.
 g) Where any member of the family possesses a National Identity Card for
Overseas Pakistanis (NICOP).
  h) Where any member of the family has a Bank Account (except in NBP, HBL,
UBL, MCB, ABL, BOP, Bolan Bank, Khyber Bank, First Women Bank, ZTBL,
Khushhali Bank, and all microfinance banks).

Evidence-based Policy Recommendation:
Though the BISP is proposed for the all the provinces of Pakistan, so far the
programme has not covered the districts of Swat, Buner, Malakand, Shangla,
and Dir in the NWFP province because of the military operation that was going
on in these districts. There are now more than 2 million IDPs living in various
parts of NWFP. While the Government of Pakistan and the international
community are making efforts to provide relief and recovery support, the funding
situation is very precarious. The Humanitarian Response Plan has only received
$119 million thus far with a pledge of an additional $21 million. This will only
cover 26% of the Humanitarian Response Plan. There is an urgent need of $543
million for relief and early recovery assistance to the internally displaced persons
from the NWFP till the end of 200911. The funding situation remains very dire,
and without fresh contributions, humanitarian response operations will be
seriously hampered. Thus far the Government has announced a short-term
income support of (cash support) of $312 per family, but actual disbursement
has not taken place. As there is no social safety net that can respond to the
present humanitarian crisis, there is a urgent need to re-structure the Benazir
Income Support programme, so that it can quickly respond to shock created by
the humanitarian crisis.

Source: Pakistan NWPF Displacement Situation Report # 4, 11th June 2009, OCHA Pakistan.

     The NEWS, 5th June, 2009

Justifications for Proposed Policy Recommendation:
There are several justifications for the proposed recommendation:

a.     The main risk to the BISP itself is the volatile situation in the country
including the security concerns, that could impede the nation-wide roll-out of the
targeting process. At the same time the newly created implementing agency for
the BISP may also receive drawbacks because of the primary concern of the
Government with the security situation, resulting in delays in implementation.

b.      The monthly cash support of Rs1,000 to the woman of each recipient
family translates into Rs167 per month per person (on the average the family
size is 6 per family), which is only 0.65 percent of the requirement of a dollar a
day. Therefore while it will provide some relief to the poor, it cannot help in
reduction of poverty. The poor are going to remain poor despite of the cash

c.     The fundamental flaw is that it is a federally implemented programme and
goes against the principle of devolution and provincial autonomy. For its
execution it is totally dependent on provincial and local governments. The
scheme has no linkages with other poverty eradication efforts, like microfinance,
or the Provincial safety net programmes such as the one in the Punjab Province.
Since the BISP is a federally implemented programme, and since the Federal
Government engaged in military operations which caused the IDPs to flee
therefore the federal Government is now well positioned to provide relief and
support to the IDPs through the BISP.

c.      The people in the districts where military operations are going on were not
targeted by the BISP because of the security situation. However now they are
living in camps, and have been registered. As they have lost their homes, and all
means of livelihood therefore they are now more poor than before, and more
poor than the poor living in districts where military operations are not going on.
Therefore the BISP should include the IDPs living in camps and with host
communities as the priority group of poor people to receive cash support under
the programme.

While the Government is trying to provide some relief measures, but considering
the magnitude of the problem and the resource constraint, it is unable to provide
all the required relief in terms of food, shelter, water and sanitation and medical
supplies The IDPs without any means and having suffered immense losses
believe that they had to abandon their homes because of the Government
military operations in their area. They are therefore holding the Government
responsible for their plight. If the present sense of helplessness prolongs among
the IDPs, they may become volatile and considering their huge number can
easily destabilize the Government by attacking Government establishments.
Therefore to preclude the chances of any such mishap from happening, it is more

prudent for the Government to channel the BISP support to the IDPs by changing
the targeting criteria to categorical targeting focusing on the IDPs and the
geographic areas where the military operations were conducted. This will help in
placating the disgruntled IDPs, mitigating the security risks, and even those to
BISP itself; and may even contribute to the popularity of the PPP Government.
This may result in more stability within Pakistan and peace in the region.


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