Compared to the revised budget outlay, the government is planning to raise its total subsidies outlay by 21.16% for the next fiscal year, despite dropping the option of fuel subsidy amid falling global oil prices, sources have said.
Food subsidy is set to be increased with the Food Ministry planning to introduce rural food rationing from next fiscal year, but consumers might soon have to pay more to get electricity as the government will be cutting down on power sector subsidies.
Finance Division placed a proposal on this regard at a budget management committee meeting, presided over by Finance Minister AMA Muhith.
According to the proposal, the next fiscal year’s subsidies outlay will be Tk22,900 crore with a 21.16% growth compared to the revised budget subsidies outlay of Tk18,900 crore.
The revised outlay has been slashed by Tk6,603 crore from the existing Tk25,503 crore outlay, according to the budget proposal.
“There will be no subsidy allocation for import of fuel oil from the next fiscal year as Bangladesh Petroleum Corporation has earned huge profits in the last couple of years by selling fuel oil at high prices compared to global prices,” Senior Finance Secretary Mahbub Ahmed told the Dhaka Tribune.
He said the government would not increase the outlay of power subsidy for the next fiscal year, while the Power Division has been asked to reduce its system loss and curb the inefficiencies in the sector.
Agriculture subsidy will not be decreased as that amount is being considered as a future investment for the agriculture sector, Mahbub said.
According to the proposal, food subsidies for the next fiscal year will be increased to Tk2,000 crore from existing Tk1,864 crore, while agriculture subsidies would be Tk9,000 crore – the same as the current fiscal year.
Next fiscal’s year subsidies for Bangladesh Power Development Board would be Tk6,000 crore, down from the existing Tk8,000 crore.
The export sector will get cash incentives worth Tk3,500 crore, while this year it was Tk3,000 crore. The rest of the Tk2,400 crore of allocations would be distributed among jute, gas and other sectors.
Last August, Bangladesh Energy Regulatory Commission increased the average price of electricity by 2.93% and natural gas by 26.29% at consumer level.
Meanwhile, a week ago, State Minister for Power Nasrul Hamid told media that a notice about fuel price cut would be floated within seven to 10 days.
Octane price will come down by Tk10-15 per litre while diesel cost will be reduced by Tk4-5.
The prices of fuel oil will be adjusted further in the future, the state minister said.