2.2pc of GDP proposed as subsidies for agriculture, food and fuel oils

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The caretaker government Monday proposed a sum of Tk 136.48 billion or 2.2 per cent of the gross domestic product (GDP) as subsidies for agriculture, food and fuel oils in fiscal 2008-09 beginning July 1.

"The amount will be spent on agricultural inputs subsidy, food subsidy and fuel subsidy," said finance and planning adviser Mirza Azizul Islam while announcing the national budget for fiscal 2008-09.

However, the caretaker government had to spend around Tk 159.91 billion in the outgoing fiscal to provide subsidies on fuel oils, fertiliser and fuel oils.

The additional expenditure was shown as quasi-fiscal costs because of no adjustment in prices of fuel oils and fertiliser in the domestic market despite substantial price hike of the items in the international market.

"A sizeable chunk of the quasi-fiscal costs amounting Tk 118.36 billion (2.2 per cent of GDP) could be met from cash resources of the revised budget of FY 2007-08 because of the increase in revenue earning during the year," said the finance adviser.

The finance adviser has proposed allocation of Tk 5.40 billion cash subsidy on diesel for the farmers in the next fiscal.

In the outgoing fiscal, original allocation for diesel subsidy that was introduced for the first time was Tk 7.5 billion. But Tk 2.50 billion was finally disbursed and distributed among 6.5 million farmers.

Besides, the government has shown Tk 54.49 billion as allocation in the non-development expenditure of the agricultural ministry, which will be used as subsidy.

Of the amount, an additional Tk 16.50 billion has been allocated for fertiliser and agricultural subsidy in the revised budget. Subsidy worth Tk 42.85 billion for fertiliser, electricity and others has been allocated for the next fiscal.

The finance adviser said there is a plan to procure a total of 3.2 million tonnes of food grains, which include internal procurement, import of food and food aid.