Social security spending may reach Rs 27b this FY

KATHMANDU, APR 18 -

The government’s expenses on social security have increased notably over the last two decades.

Social security expenses through the Ministry of Federal Affairs and Local Development (MoFALD) reached Rs 11 billion this fiscal year from Rs 280 million in 1996-97, the ministry said. The figure could rise up to Rs 27 billion if benefits offered through various other agencies are included, according to Dinesh Thapaliya, joint secretary at the ministry.

Along with the rise in the social security spending, the number of beneficiaries has also risen over the period. The ministry’s report shows the number of social security beneficiaries increased to 2.16 million from 344,348 over the review period. For old-age allowance alone, the government has allocated Rs 4.8 billion for 800,000 individuals for this fiscal year.

Ever since the Manamohan Adhikari-led government initiated old-age and widow allowances in FY 1994-95, such benefits have been extended to different sections of the society, including people with disabilities and those from dalit and endangered communities.

The government is also preparing to start health insurance package for employees.

Thapaliya said the expenses increased massively in the recent years. “As more people get aware about social security benefits, the demand increases,” he said, adding the ministry has estimated Rs 12.50 billion in social security expenses for FY 2014-15.

The government offers social security facilities for health, maternity care, old-age and people with disabilities and those from deprived communities. Under the inclusive development strategy, the government introduced the programme to protect the poor, children, senior citizens, workers, endangered community people, conflict affected people and single women.

The government since 2009-10 has been collecting 1 percent tax from both private and public sector employees to finance a universal social security scheme. The Social Security Fund (SSF) has so far collected more than Rs 4 billion in the last five years.

The major chunk of the social security spending goes to pensions, social assistance and scholarships programmes, according to a Finance Ministry report.

As per the International Labour Organisation’s (ILO) World Social Security Report 2010-11, Nepal’s social security plan incorporates 40 percent of the population.

Despite such a large spending, Nepal’s social security scheme has not been effective due reasons such as the lack of database, poor presence of banks and financial institutions in rural areas, and most importantly, the unavailability of VDC secretaries.

The country also lacks a strong legal framework to regulate the sector. Although the government has planned to endorse the Social Security Act 2011, the draft is still under the Legislature Parliament’s consideration.

Due to the absence of an act, most of the social security programmes are either implemented through a regular budget process or a Cabinet decision.

Thapaliya said the ministry distributes money through a working guideline in the absence of an act.

Source: The Kathmandu Post