The government is considering doubling the power sector subsidy to Tk180 billion in the upcoming budget of 2022-23 fiscal year (FY23).
The overall subsidy and incentive allocation are estimated to rise by Tk 166 billion to Tk 570 billion in the upcoming budget, Finance Division officials, said on Tuesday.
In the current budget the subsidy in the power sector was fixed at Tk 90 billion. This year, the subsidy is being doubled in this sector. However, in the revised budget, the subsidy in the power sector has increased by Tk 30 billion to Tk 120 billion for FY22, says a UNB report.
The subsidy and incentives have continued increasing in the budget every year. As a result, the allocation is also being increased. Such as in the budget of FY22, Tk 404 billion was allocated as subsidy and incentive, which were increased by Tk 128 billion to Tk 532 billion in the revised budget.
The allocation in the subsidy, incentives and loan assistance is estimated to increase by 26.13 per cent or Tk 279 billion to Tk 1.77 trillion in the upcoming budget due to adverse impact of Covid-19 pandemic and Ukraine-Russia war, the budget officials said.
In the budget of FY22, the allocation of these three sectors was Tk1.49 trillion.
According to the estimates of the finance division, the size of the budget of the upcoming FY23 is around Tk 6.78 trillion. Out of this, the total expenditure in the three sectors of subsidy, incentive and cash loan has been estimated at Tk1.77 trillion.
In the upcoming budget, Tk 150 billion is estimated as incentive for the agricultural sector. The current fiscal budget allocated Tk 95 billion for the agriculture sector. Considering the importance of food production the incentive is increasing by Tk 45 billion. Though, in the revised budget, the total expenditure in this sector has increased by Tk 25 billion and stands at Tk 120 billion.
Finance Division sources said around Tk 173 billion is estimated to allocate for import of LNG, payment of interest subsidy on incentive packages. In the budget of the current financial year, an allocation of Tk 103 billion was kept for this sector. In this sector the allocation for subsidy and incentive was proposed to increase by Tk 70 billion. In the revised budget, the subsidy in these sectors has been increased by Tk 50 billion to a total of Tk 153 billion.
The finance division officials say the subsidy will be effective only if the prices of electricity, gas and fertiliser are not adjusted in the next financial year. If the prices of electricity, gas and fertilisers are increased, the amount of subsidy may also decrease.
Among others, in the upcoming budget the food sector subsidy is estimated at Tk 67.45 billion.
According to the Finance Department, the target for procurement of food grains in the current financial year was 3.26 million tonnes. In contrast, about 75 per cent of food grains have been collected.
On the other hand, the total food grain distribution target in the current financial year is 3.27 million tonnes.