Govt to increase food subsidy

The government plans to increase the food subsidy by around 32 percent to Tk 3,721 crore in the revised budget for the outgoing fiscal year.

It also wants to increase the food subsidy to Tk 4,000 in the new budget for the next fiscal year, according to the plan of the finance ministry.

The food subsidy was increased by more than 50 percent in the current fiscal year over the previous budget although prices of staples fell in international and local markets.

The government introduced a programme last year to distribute rice among the poor at Tk 10 a kilogram, which is mainly creating pressure on the subsidy to be increased, a food ministry official said.

Besides, rice prices start going up this year. The government had plans to import 2 lakh tonnes of rice this year, which may increase further in the next fiscal year, the official said.

Rice distribution through open market sales will also be increased, which would also contribute to the increase in the food subsidy, he said.

The overall subsidy may be increased by around 16 percent to Tk 27,500 crore in the next fiscal year, compared to the proposed revised allocation.

In the original budget for this year, the allocation for subsidy was Tk 26,729 crore, which has been lowered to Tk 23,830 crore in the revised budget.

The allocation on overall subsidy in the revised budget is decreasing mainly due to a fall in agriculture subsidy, the official said.

The agriculture subsidy should be set at a low level, as the fertiliser prices in the international markets are low, the official said.

Agriculture subsidy was earmarked at Tk 9,000 crore in this fiscal year, but it was lowered to Tk 6,000 crore in the revised budget.

However, in the new budget, the allocation is going to be set at Tk 9,000 crore.

For the first time, the finance division is not allocating any fund as subsidy for Bangladesh Petroleum Corporation (BPC) in the current fiscal year, and there will no allocation in the budget as well.

The government had given the state-run agency Tk 800 crore in 2015-16. But the fund was later withdrawn as it was not required.

BPC received more than Tk 42,000 crore from the government as subsidy in about eight years.

BPC, the country's lone oil importer and seller, has been making a huge profit from the last fiscal year, as the government did not cut prices of petroleum products in the local market despite its falling prices in international markets, an official of the energy ministry said.

In the next fiscal year, the power sector will get a subsidy of Tk 5,500 crore against the current year's allocation of Tk 6,000 crore. However, the amount was lowered by Tk 500 crore to Tk 5,500 crore in the revised budget of the current fiscal year.

There will be no change in the subsidies for exports and jute in the next fiscal year, which was Tk 4,500 crore for the current year.