Pakistan Institute of Development Economics


Disbursement efficiency

Publication Year : 2020
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Daily wage earners and other lower income groups are likely to be the most affected segment during this lockdown. As a policy response, the government of Pakistan has announced an economic package.The package is worth appreciating; however, significant care should be taken to avoid the inclusion and exclusion errors. In the Pakistani context, reaching out to vulnerable groups is not a simple task. Before the final disbursement of the target transfers, the government has to work out important dimensions of the design elements, the nature of the transfer, the involvement of the local communities, and the cost-effectiveness of the package.The design elements include the eligibility requirements, the benefits specifications, the recruitment and distribution procedures, and the choice of governance structure. Several criteria can be used to check the eligibility for any programme of social safety nets. For instance, Mean Testing (Poverty Scorecards), Geographical Targeting, and Community Targeting are the most frequently used criteria in this regard. A recent dissertation at the International Institute of Social Studies (IISS), the Netherlands, titled ‘Evaluating Political Capture and Targeting Performance of the Benazir Income Support Program (BISP) in Pakistan’, has shown that community targeting is the most efficient way for avoiding the inclusion and exclusion errors in BISP.Since the Corona outbreak is a situation of exigency, the district level administration should involve clerics, local politicians, or village level committees for quick identification of the vulnerable households. This way, we can reduce both the leakage of benefits to non-target groups and the non-coverage of target groups of the programme.Next, we need to be sure about the total size of the overall programme. Any programme of social safety nets will not achieve success if it reaches only a tiny fraction of the target groups. Also, since different groups are presumed to be affected differently, it is useful to distinguish and measure the sizes of multiple groups. The programme should be designed in such a way that it provides immediate benefits to needy households. And to those households which are not currently in need but are vulnerable to shocks that could send them into destitution in future. Thus, it is useful to identify and measure the size of both these groups. Also, the design of the programme should have clear guidelines with regard to the provision of benefits to each of these groups.Likewise, the specification of the transfer type and size is essential. With regard to the type of transfer, ration card, cash transfer, or subsidy on food would serve the purpose. Cash transfers are usually simple, administratively easy, and cost effective. However, in case of shortages, food packages are preferred.In the context of the Corona pandemic, food packages are preferred to cash transfer for some other reasons as well. First, food packages reduce the possibility of virus transmission through cash circulation which is associated with cash transfers. Second, food packages if distributed by the district administration with the help of local communities would enhance the benefits of the lockdown in terms of less spread of the virus. Finally, food transfer maintains its real value relative to cash over time during inflation and different transaction costs in different communities. Thus, keeping the transaction cost of food distribution aside, food package is preferred in the context of the current outbreak.In case of the size of the transfer, it should be linked to the number and ages of the households’ dependents as these criteria are directly linked to the vulnerability of households. Again, this information can be efficiently verified by the involvement of local communities.In addition to identification and information provision, the involvement of the local community also reduces the administrative costs. However, such involvement should strictly discourage leakages, elite capture, and bias in decision-making. Alternatively, government authorities should efficiently regulate the programme right from design to implementation. All these measures if taken properly would ensure the efficiency of the economic package.