Should Income Support Program Continue?

PPP government started a scheme with the name of Benazir Income Support Program.  Under this program PKR1000 is to be doled out to people having family income below PKR6000. 

BISP was initiated in October 2008 with an initial allocation of Rs.34 billion (US $ 425 million approximately) for the financial year 2008-09. The Programme aimed at covering 3.5 million families in the financial year 2008-2009. 

Taking 3.5 families as beneficiary and an amount of PKR1000 per family; total amount comes out to be 28 billion. This indicates that an amount 6 billion has been spent elsewhere taking the overheads to be 21.5%. By not initiating this program government would not have borrowed 34 billion, almost 21.8% less to meet its budget deficit.

Allocation for the financial year 2012-13 is Rs. 70 billion to provide cash assistance to 5.5 million families, which constitutes almost 18% of the entire population. The Programme aims at covering almost 40% of the population below the poverty line, that is 72 million people. Considering four people to a household gives a target of 18 million. At current rate amount required to provide this subsistence will be PKR259 trillion per annum 

It is imperative to analyse whether PKR1000 has benefited any of those who earned below PKR6000 (US$86).  Over these five years buying power of people has reduced with an average rate of 10% per annum.  So the first year a family earning PKR6000 had PKR7000, but their buying power was reduced to PKR6300. This means their original buying power went down to PKR5400. Today the same family holds original buying power of around PKR4150 (US$38.6), inclusive of BISP. 

A macro analysis confirms failure of this program in reducing poverty.  It has resulted in an increase in unwanted state expenses.  Had this money not been disbursed, devaluation of Pak Rupee would have been far less and so are the interests paid by government on loans. There would not have been requirement of printing more then required currency notes for circulation, thus would have helped keeping buying power more stable for common man.

This government, instead of shutting down this evil economic program has further increased the amount of dole, to gain political objectives. Objective is make people beggars and treat them as their political slaves.