Designing Social Protection for the Rural Poor: Learning from Lessons on the Ground

This paper seeks guidance for future directions of a social protection system in rural Bangladesh on the basis of lessons learnt on the ground. For this purpose, an attempt was made to glean insights about the strengths and weaknesses of the existing social protection system by utilising a large-scale poverty survey that is representative of rural Bangladesh. Careful empirical investigation shows that despite the fact that the existing system is reasonably progressive in the incidence of benefits, the system has failed to achieve the major objectives of serving the interest of disadvantaged groups by shoring up their living standard, by enabling them to cope better with periodic crises and by preventing them from falling down the asset ladder. The proximate reasons for this failure are two-fold. First, the aggregate amount of benefits is abysmally small in relation to the need; and secondly, even the small amount that is available is distributed heavily in favour of better-off households. These findings hold important lessons for the future. In the light of lessons learnt, the paper argues that as part of necessary rationalization of the existing system, serious consideration should be given to taking out education-based programmes from the umbrella of social protection and housed elsewhere. Among the existing programme categories, special emphasis ought to be given to employment-based interventions. They are relatively more favourable for the poor and there exists enormous potential for expanding them manifold. Finally, the paper draws attention to a serious lacuna that exists in the existing system insofar as a comprehensive system of health insurance does not yet exist. Health-related shock is the most pervasive type of shock in rural Bangladesh and is the single most important reason why many non-poor households slide into poverty over time and poor households fall deeper into poverty. A social protection system worthy of its name cannot ignore the need for setting up an effective mechanism for protecting vulnerable households from the pernicious effect of this most pervasive of shocks.