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Monday, 23 September 2019, 02:53AM

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Subsidy will exceed Taka 45 thousand crore in the next budget

Business

Asif Shawkat Kollol, Special Correspondent, Barta24.com | 24 May 2019, 09:25AM

Subsidy will exceed Taka 45 thousand crore in the next budget
Photo: Collected

Dhaka, (Barta24.com): In the budget of 2019-20 fiscal year the total allocation  will exceed Taka 45 thousand crore for the first time in government subsidy, incentives and cash credit. This amount is more than Taka 6500 crore excess of the current budget of 2018-19.

The main cause of enhancement of subsidy is incentives of two percent on foreign remittance, Taka 8500 crore as subsidy on Liquidified Natural Gas(LNG). 

Of the total subsidy allocation of Taka 8500 crore was kept in this sector. It was learnt from the source of Finance Ministry. In the current fiscal the allocation is Taka 38 thousand 500 crore.

The finance division said that the subsidy, incentives and cash credit though increase than the previous year but the percentage of GDP remained unchanged.

Generally the subsidy is mostly given in agriculture and food sectors. And incentives are given in agriculture, garments export and jute sectors.The cash credit is mainly given to Bangladesh Petroleum Corporation(BPC), Power Development Board(PDB) and to some other organizations.

However the cash credit which is given to BPC and PDB is considered as a kind on incentives. Because this credit is never taken back. So the whole amount of credit becomes grant and subsidy. The government gives credit to PDB for purchasing power from private sources at a high rate and takes subsidized rate from the consumers.

Subsidy: In coming fiscal highest subsidy will be given to power sector. The primary estimate is Taka 9500 crore. In the current fiscal the amount is Taka 9600. Taka 8500 crore subsidy in LNG import next. So far Taka 2500 was given to BPC for LNG import. The amount of subsidy has been estimated to Taka 4500 crore in food. The amount is excess of Taka 104 crore than the current fiscal. Besides, an allocation of Taka 9600 crore has been kept for other sectors.

Incentives: In the next budget the amount of incentives will remain same. In the next budget the estimated amount will be Taka 13500 crore like the current one. For agriculture sector Taka 13500 has been proposed. As incentives for import the amount is Taka 4000 core and for jute sector it is Taka 500 crore.  

Cash credit: In the cash credit head Taka 5000 core has been ear marked. However no credit will be given to PDB and BPC. But the amount will be given to other sectors.

As the price of fuel oil is less in the International market so the government is not giving any subsidy to BPC for the last few years. This continuity will not be broken this year. As now PDB is considered as a commercial organization so there will be no subsidy.

Former adviser to care taker government AB MIrza Azizul Islam said that the government is to give subsidy in various sectors but it should be monitored that how this subsidy is used. He further said that as the subsidy should come down as Bangladesh is becoming middle income country but it is increasing is not understandable.

Refinancing: Due to irregularities, corruption and default loan there is an allocation of Taka 1500 crore to salvage the sinking banking sector. This amount will be spent to cover the deficit of capital. On June 13 Finance Minister AHM Mostofa Kamal will present the budget of 2019-20 fiscal year in the Jatiyo Snagsad.

Recently initiatives were taken to bring down the default loans for salvaging the problem ridden banking sector. Besides, Bangladesh Bank has announced separate facilities for good customers.

However the experts are of opinion that this opportunity instead will encourage the default culture.