Subsidy in agriculture must be ensured as high cost of agro-materials dropping out farmers02 January 2023
The Finance Division is under pressure to allocate increased funds for ministries and divisions in subsidy under the current national budget. The amount demanded for additional subsidies stood at some Tk 90,000 crore, with the agriculture and power sectors accounting for 75 per cent of the amount. The rest of the money was sought by the Energy Division, the Trading Corporation of Bangladesh and the Food Ministry.
The current budget has been earmarked at Tk 81,490 crore. The Finance Division has already decided to increase the allocation by Tk 20,000 to Tk 102,000 crore in an effort to manage the demand for extra funds. The decision was taken at a meeting of the Coordination Committee on Macro-Economy and Resources chaired by Finance Minister AHM Mustafa Kamal. In order to overcome the pressure for the additional subsidies, the Finance Division has already advised the Power Division to enhance power tariff in the New Year.
The government has, meanwhile, struck a preliminary agreement with the IMF for a $4.5 billion loan package over a period of three years to deal with the country's ongoing dollar crunch. A power tariff hike would cause a domino effect in the economy, triggering another wave of increase in the price of essential and other goods. High inflation throughout 2022 kept most people in distress as the wage growth was slower than inflation.
At present material cost of agriculture is abnormally high as a result of which farmers in Bangladesh are being discouraged and agricultural growth has been faltering. Prices of gas and power increased recently as a result of which cost per unit of electricity has increased. The increasing cost of labour and other ingredients, the percentage of people engaged in farming has come down at the beginning of the twentieth century. Agriculture is becoming cost-prohibitive and non-agricultural sectors are expanding and therefore more people are dropping out. For macroeconomic growth, subsidies in agriculture, health and education should be emphasised.