For a developing country with increasing income inequality such as Thailand, any pro-poor policy deserves public support. But the government's latest subsidy programme, the state welfare scheme for the poor, does not seem to be on the right track. It is flawed in its design and implementation, still questionable over its sustainability and not practical as a means for poverty reduction.
As part of a 41.9-billion-baht aid package approved by the cabinet on Aug 29, pre-registered low-income earners are given welfare cards, each is pre-loaded with 200 or 300 baht a month, to buy low-priced consumer products at Thong Fah Pracha Rat and other designated shops. The financial aid includes discounts for rides on public buses and trains and utility bills.
The restriction on where the registered 11.7 million poor are entitled to shop is the main problem. It restricts them to buy only products selected for sale in those stores. Decision-makers of this policy seem to have no trust in the poor to make their own judgement on how to spend the money.
For each of them, an amount of 300 baht (for those earning under 30,000 baht a year or unemployed) or 200 baht a month (for earners in the range of 30,000-100,000 a year) is not an allowance that can make a difference. But at least it gives them a small amount of extra cash to buy necessary items.
But they are only allowed to spend the money in selected stores which have installed electronic data capture (EDC) machines that can read the welfare card. And there are not many of them, only about 20,000 stores designated by the government; merely a quarter of them are now equipped with the EDC.
The limited number of outlets cannot serve all 75,000 villages and more than 2,000 municipal areas throughout the country. People are forced to travel to these shops, additionally paying for petrol or transport fees. When they reach the stores, they can only buy types and brands of consumer products the state has selected to put on shelves.
The Isaan Record, a Khon Kaen-based online news agency covering the Northeast, recently made a consumer survey in Ubon Ratchathani. It reported that consumers there are not happy with the scheme and prefer to receive cash and have the freedom to spend it in their local stores.
Those who took in the survey said they could not buy products from places and markets in their communities but have to travel to the nearest Thong Fah store. Prices of certain products listed in one surveyed store was also found to have been higher than those listed for the same products in nearby local markets.
Even though the shopping card scheme can circulate about 17 billion baht into local economies, the majority of the money will go to the 20,000 designated stores and selected manufactures and distributors of products put on their shelves. Other local stores, street and fresh market vendors are excluded.
If the government can afford to spend on this cash handout scheme, it should give them cash without spending conditions attached. The money can be either transferred to their bank account or other means such as actual "gift cards"which they can use in an ordinary ATM to get the money.
This will give the registered poor more freedom to decide to buy fresh food and other products at their own choice from their localities, and buy things in bulk at other stores to get a discount.
Also, it would give poor people dignity to shop like everyone else.
The government should also rethink its similar restriction imposed on transport subsidies. Now each cardholder has 500 baht credit a month in their card to spend on inter-provincial buses, another 500 baht for riding third-class trains and a sum of 500 baht for those living in Bangkok and other six adjacent provinces to spend on public transport.
Again, the state should rather give them cash and let them diversify their spending.
Cash handout is not a bad policy after all, especially when people are suffering from impacts of natural disasters or live in extreme poverty.
But it needs the right approach with sustainable goals set for poverty reduction and economic inclusion.
The state should help them find ways to increase their income or create good jobs or entrepreneurial opportunities for them.
More importantly, the state social safety nets, such as healthcare schemes and free education, need to be sufficiently funded and remain accessible to all.
The government should also come up with long-term pro-poor policies and terminate the opposite such as the current law amendment that will ban farmers from rebreeding commercial seeds they bought from companies.
Practical and effective pro-poor and inclusive economic policies can help the poor climb the economic ladder and live a more decent life like the rest of people who are not registered as the poor under the scheme.
