Farm subsidy remained static at Tk 200 crore in the last two budgets. Though the initial figure was Tk 100 crore in 2001-2002, it was ultimately doubled in the revised budget.

While proposing the increase in agriculture subsidy, Finance Minister M Saifur Rahman also proposed to provide a fund of Tk 50 crore to help develop agro-based industries.

In the last fiscal, there was an allocation of Tk 300 crore for the 'Equity and Entrepreneurship Development Fund', in which agro-based industries and computer software industries had 50-50 stake.

Overall allocation for the agriculture sector has been proposed at Tk 935 crore, covering both revenue and development expenditures, up from Tk 757 crore in the revised budget of 2002-03.

The agriculture sector's contribution to GDP is estimated at 23.46 per cent, according to Bangladesh Economic Review 2003, released yesterday along with the budget documents.

In his budget speech, the finance minister proposed extension of tax exemption facilities to all agricultural activities by another year, which means the agriculture sector would enjoy tax exemption up to June 30, 2006, instead of 2005.

He also proposed withdrawal of VAT from locally produced and packed rice, pulses, wheat, maize, garlic, onion, chili, ginger, coriander seeds, vegetables, fresh fish and meat.

In order to further extend assistance to the agricultural sector, he proposed withdrawal of VAT on gypsum di-hydrate used as fertiliser and with pesticides for killing rats in grain fields.

The minister proposed to reduce the customs duty on refined palm oil and set the tax incidence at 23.63 per cent. This will remove the existing tax anomaly between the refined soya bean and refined palm oil.

The minister also proposed to reduce the tax incidence on wheat to 7.5 per cent, withdrawing advance income tax (AIT) and IDSC (infrastructure development surcharge).

Saifur proposed to maintain the existing 'zero' rate of customs duty on agriculture, fisheries, poultry, dairy, life saving drugs and allied instrument/equipment.

The existing customs duty on agricultural equipment, irrigation pump, fertiliser, poultry equipment and few other items is zero. But for fish fry, breeding animal, poultry parent stock, seeds and certain types of fertilisers, a 6.5 per cent AIT and IDSC is there (applicable in case of import). In order to give support to such agriculture-related sectors, the minister proposed to withdraw the AIT and IDSC.

To give necessary protection to the local sugar industry, he proposed to impose a 40 per cent supplementary duty on imported sugar instead of the existing 20 per cent.

There is ample production of mango, jackfruit, banana, papaya, berries, pineapple, melon and guava. Even then various types of fruits are imported through spending a huge amount of foreign currency. Considering this aspect, the finance minister proposed to increase the supplementary duty from 30 per cent to 40 per cent on import of fruits.

In the same manner, he proposed to impose a 25 per cent supplementary duty on import of spices like cardamom, 'daruchini', cloves, 'jeera', black pepper etc.