Subsidy to be reduced in next FY

A sum of Tk 27,500 crore is planned to allocate for subsidy purposes in the next fiscal year, according to Finance Ministry sources.

A total of Tk 500 crore has been reduced in the imminent budget compare to the running budget as the government kept Tk 28,000 crore for subsidy in FY 2016-17.

The allocated amount of money for subsidy in the fiscal year 2017-18 is equal to 1.2 percent of the country’s gross domestic product (GDP).

The government allocated Tk 35,000 for subsidy in 2013-14 fiscal, which was equal to 3 percent of Bangladesh’s total GDP.

Since then, the government planned to cut subsidy and Tk 7,000 crore has been reduced in last five years.

The government had to spend a large amount of money for subsidy which was a matter of concerns. However the anxiety has been reduced following the decision and it is a positive sign for the country’s economy, concerned officials said.

If the subsidy cost increases, the government will fall under pressure. The allocation money has trimmed from the past as the low price of goods and oil in the international market. The government has satisfied with the macroeconomic management.

Sources said, some Tk 23,000 crore has been fixed for this year revised budget as subsidy. The government has allocated Tk 27,500 crore for 2017-18 FY. But the amount of money will be minimized in revised the budget.

Meanwhile, the government is trying to decrease the amount of subsidy to ‘Zero’ by 2021. They will give subsidy only the agriculture sector after 2021. International Monetary Fund (IMF) advised to provide agriculture equipments to the farmers instead of money.

The government gives subsidy in six to seven sectors like power, agriculture, food, jute and jute goods. Besides, several sectors are given subsidy but the amount of the allocation is very poor. Earlier, the government had given much subsidy in the oil but the price has been dropped so that the government has stopped to give subsidy in this sector from the last fiscal year.

It has been learnt that, the government has planned for proposed to allocate ‘Zero’ in this sector in the forthcoming national budget. In the agriculture sector, the government gave subsidy for importing fertilizer. They proposed Tk 9,000 crore for next budget.  Some Tk 9,000 crore allocated for current fiscal year when Tk 3000 crore has been reduced in revised budget.

The government is proposing Tk 5,500 crore for the power sector. They unanimously reached a decision of giving the subsidy to meet their demand.

The government introduced a project Open Market Sale (OMS) for the country’s poor people. As part of this project, they sell rice, flour in cheap price. The government is planning to allocate Tk 40,000 crore more in the upcoming budget.

A total of Tk 500 crore is expected to allocate in jute and jute relevent products. Besides, the government is giving more Tk 1,500 crore for the other sectors.

According to statistics, some Tk 7,000 crore has been cut as allocation over the past five years.

When contacted by Jago News, AB Mirza Azizul Islam, a prominent Economist and former finance Adviser to caretaker government said the government should give subsidy in those sectors, which is needed and take proper measure as the allocation is spent in a proper way.

“It is logical for the marginal people of the country,” he added.

(The article originally published in Bangla edition of Jagonews24.com is written in English by Zobaer Ahmed)