Next budget to see ‘subsidy cut’
Lion share of subsidy to 'go for fertilizer import'
13 May 2017, 23:25
Dhaka: The subsidy in the budget for the next fiscal year (2017-18) is likely to be trimmed a bit compared to the outgoing fiscal year.
According to sources at the Finance Ministry and the National Board of Revenue (NBR), the subsidy size this time will be around Tk 27,450 crore against Tk 28,000 crore in the outgoing fiscal year.
While announcing the budget last year, Finance Minister AMA Muhith had declared a Tk 28,000 crore subsidy but later it was revised to Tk 23,000 crore one.
In the new fiscal year, the sources said, Tk 9,000 crore of the proposed subsidy amount will be spent on fertilizer import.
Previously, a good amount of the subsidy money used to go to fuel oil, and there will be no subsidy regime in the new budget for this sector as the fuel prices declined on the world market, the officials said.
This time, the power sector is likely to get Tk 5,500 crore followed by a programme of rice and flour distribution for poor at fair prices with Tk 4,000 crore. In the 2016-17 fiscal, this sector (rice and flour distribution) got Tk 3,000 crore.
An amount of Tk 4,000 crore is going to be allocated as export incentives, aiming to encourage more and more exports from the country. Readymade garments and such other high-profile export items will get the incentives.
An amount Tk 450 crore will be proposed for the jute sector, while other sectors to get Tk 1,500 crore in the next fiscal year. "Although a big portion of the budget still goes for subsidy, the subsidy pressure is gradually easing," a Finance Ministry senior official told UNB wishing to remain anonymous.
And he attributed this to the lower rate of fuel oil price alongside the downtrend in product prices.
According to Finance Ministry data, the allocation for subsidy has marked a fall by to 3-5 percent. In 2013-14 fiscal year, the subsidy allocation was Tk 35,000 crore, which was three percent of the GDP, and the whole money was spent in that particular fiscal year.
Currently, the government is giving subsidy to seven sectors, including power, agriculture, export, food items, jute and jute products in addition to the negligible ones to some other sectors, the Finance Ministry official said.