THE challenge of addressing extreme poverty is both urgent and complex. While Bangladesh has made significant strides in poverty reduction since the 1990s, recent economic headwinds, including persistent inflation, global commodity price fluctuations, and post-pandemic recovery pressures, have exposed vulnerabilities of millions living just above or below the poverty line. As of 2022, the national poverty rate stood at 18.7 per cent, with 5 per cent of the population living below the international extreme poverty line of $2.15 a day. World Bank projections, however, indicate a reversal of this trend, with extreme poverty expected to rise to 9.3 per cent in the 2025 financial year, pushing about three million more people into poverty. This uptick is attributed to economic slowdown, job losses and elevated inflation, which reached 9.3 per cent in February 2025.
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Approach to poverty reduction
THE Bangladesh Nationalist Party through its comprehensive 31-point plan to repair the state has articulated a new strategic vision to eradicate extreme poverty and build a sustainable social protection framework. The party鈥檚 approach recognises that extreme poverty is not solely a function of income deprivation but is deeply linked to institutional decay, political centralisation, corruption and economic exclusion. In its 31-point reform agenda, the party emphasises the need for fundamental state restructuring, with a focus on decentralising governance, restoring accountability and ensuring inclusive economic growth. The party鈥檚 vision calls for empowering local government institutions with both financial and administrative authority to identify and serve the needs of the poor more effectively. The decentralisation of power is seen as critical to breaking the long-standing capture of resources by politically connected elites, which has historically distorted the allocation of public funds intended for the most vulnerable segments of society.
Central to the party鈥檚 strategic vision is its commitment to fighting corruption, which remains a major barrier to poverty reduction. Despite decades of donor-supported social protection programs, leak, mismanagement and political patronage continue to undermine their effectiveness. The party proposes the establishment of an independent anti-corruption commission, effect judicial reforms and put in place transparent oversight mechanisms to ensure that resources allocated for poverty alleviation directly reach the intended beneficiaries. Without addressing these systemic weaknesses, even well-funded programmes risk becoming vehicles for rent-seeking rather than tools for social justice.
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Economic empowerment
THE Bangladesh Nationalist Party places a significant emphasis on job creation and inclusive growth as the most sustainable way out of poverty. The party鈥檚 policy agenda includes support for small and medium enterprises, the modernisation of the agricultural sector, rural industrialisation and targeted skills development programmes to integrate the poor into productive economic activities. As part of its comprehensive approach, the party envisions introducing a family electronic card system, where each eligible household, equivalent to a family of four, will receive an electronic card allowing them to access basic food items from designated stores nearby at no or minimal cost. This innovative approach not only provides immediate food security and relieves pressure on household expenditures but also enables beneficiary families to save a portion of their income that would otherwise be spent on food. The accumulated savings are intended to be channelled into productive purposes, such as starting or expanding small enterprises, thereby facilitating the transition from dependency to self-reliance. By fostering employment opportunities in both urban and rural areas, combined with direct measures to strengthen household financial capacity, the party aims to reduce dependence on government transfers and empower vulnerable households to build sustainable livelihoods. The party also envisions major investments in primary education, health care and infrastructure to break the intergenerational transmission of poverty.
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Social protection architecture weaknesses
IN CONTRAST to the reforms agenda that the Bangladesh Nationalist Party has proposed, the budget presented by the interim government has largely opted to expand the existing social safety net architecture. The total allocation for social safety nets has been increased to Tk 95,908 crore, representing a marginal rise compared wit that of the previous years. This increase includes incremental adjustments in monthly allowances for old-age pensioners, widows and people with disabilities, along with a modest expansion of beneficiary coverage. The government has also announced plans to streamline safety net schemes by consolidating overlapping programmes to reduce administrative inefficiencies. However, these measures are largely incremental and continue to operate within the framework of a highly centralised, bureaucratic delivery system that has been prone to inefficiencies and corruption.
A critical weakness of the budget鈥檚 social safety net approach is its heavy reliance on cash transfers without adequate complementary investments in economic empowerment or human capital development. While cash assistance provides temporary relief, it does not address the underlying causes of poverty such as lack of productive assets, limited access to quality education and health care and exclusion from formal financial systems. Moreover, the increase in allowances remains insufficient when adjusted for inflation, which has eroded the real purchasing power of the poor. With inflation rates hovering around 10 per cent, many vulnerable households continue to struggle with rising costs of food, healthcare, and basic services.
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Need for comprehensive reform
THE financing of social protection programmes remains a major constraint for both the current government and any future administration seeking to scale up poverty reduction efforts. Bangladesh鈥檚 tax-to-GDP ratio remains one of the lowest in Asia, hovering around 7.5鈥�8 per cent, which severely limits the government鈥檚 fiscal space. A narrow tax base, widespread tax evasion and limited capacity of the National Board of Revenue have constrained domestic resource mobilisation. Furthermore, high levels of public debt and competing demands for infrastructure development, subsidies and debt servicing further strain the available budget for social programmes. The Bangladesh Nationalist Party recognises that without comprehensive tax reforms, improved revenue collection, and better public financial management, sustainable financing for expanded social protection will remain elusive.
Institutionally, the delivery of social protection programmes suffers from severe bottlenecks that impede their effectiveness. Administrative fragmentation, overlapping mandates between ministries, lack of reliable beneficiary databases and political interference in beneficiary selection all contribute to poor targeting and the leak of resources. Many deserving beneficiaries remain excluded while politically connected individuals continue to benefit disproportionately from state assistance. The party proposes to strengthen institutional capacity by creating a unified, technology-driven national social registry, overseen by independent audit bodies, to ensure accurate targeting and monitoring of program outcomes. Additionally, building the capacity of local government institutions will be essential to decentralise service delivery and increase responsiveness to community needs.
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More just, resilient and inclusive Bangladesh
ADDRESSING extreme poverty requires far more than marginal increases in welfare spending. The 31-point framework of the Bangladesh Nationalist Party offers a transformative vision that seeks to address root causes of poverty through structural reforms, decentralisation, anti-corruption measures and inclusive economic growth. While the budget provides an immediate relief for vulnerable groups, it lacks the depth and ambition needed for sustainable poverty eradication. Without significant reforms to improve financing capacity, strengthen institutions and empower local governance, social safety net programmes will continue to fall short of the potential. A synergistic approach that combines the party鈥檚 structural reform agenda with necessary short-term support could ultimately offer a viable path to eliminate extreme poverty and build a more just, resilient and inclusive society.
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Dr SM Ziauddin Hyder is an adviser to Bangladesh Nationalist Party chairperson and former senior World Bank official.
