• Thursday, Jan 27, 2022
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fertiliser subsidy: BADC estimates over Tk76bn this fiscal

  • Published at 06:51 pm September 14th, 2013

Bangladesh Agriculture Development Corporation (BADC) has estimated the fertiliser subsidy in the current fiscal may stand at Tk76.81bn.

The estimation says the agriculture sector will receive a total of Tk90bn subsidy.

In last four fiscal years from 2009-10, the government has provided a total of Tk308.6bn on fertiliser, said official sources.

Taking the figure into account, the fertiliser subsidy was given Tk75.65bn every year on an average during the period.

Despite it, the agricultural contribution to the country’s gross domestic product has declined to 14.33% in the last fiscal from 15.02% in the previous fiscal, said finance division officials.

International Monetary Fund has added condition under ECF fund to reduce subsidy.

But Agriculture Minister Matia Chowdhury is determined to continue high provision of subsidy and expand the subsidised fields in the sector. “Whatever the donors say, we would not stop subsidising the agriculture sector,” she said.

On August 25, the government provided Tk68bn as subsidy to import urea fertiliser, which has reduced the price from Tk20 to Tk16 per kg on the local market.

During the four years, 17.5m tonnes of subsidised fertiliser were sold to the farmers.

“The agriculture sector has received little benefit from the subsidy,” a senior finance division officials however claimed, adding that the situation is being closely watched by the International Monetary Fund.

“Finance Division is also observing if there is any significant return from that huge amount of subsidy.” He said there is a strict condition under the IMF’s extended credit facility that the fertiliser subsidy must be within the budget’s estimation.

The next installment of ECF fund is expected to be released next month after the third review mission’s visit to Bangladesh this month.

A meeting on 9th this month at the finance division in Dhaka discussed the about the IMF’s ECF condition on fertiliser subsidy.

Officials of finance division, agriculture ministry and finance ministry’s monitoring cell attended the meeting to estimate projected subsidy for the upcoming years.

As per condition, the government has no scope to spend public money in excess of the projected fiscal deficit target.

The fiscal deficit, including grants, is estimated at $7.06bn or about 4.6% of GDP for the current year.

Finance division officials who attended the meeting said the finance ministry does not favour any hard condition of the IMF to rein in public expenditures in a critical area of importance like that of agriculture subsidies.

But an official said the ministry also does not have enough cushions to accommodate allocation of more funds to facilitate settlement of accumulated bills.

He said the meeting also discussed the future subsidy target of fertiliser which the IMF mission would want to know to review ECF fund. Industries Minister Dilip Barua echoed the Agriculture Minister, saying the donors fail to understand the necessity of subsidy in the agro sector.

“As the country’s agriculture land has shrunk over the years, the more agro production needs to be ensured on limited land, which requires making fertilisers affordable to the farmers,” Dilip Barua emphasised.

BADC estimates a total of 875,000 tonnes of Triple Super Phosphate (TSP), Muriate of Potash (MOP) and urea will be imported in the current fiscal.

In the next fiscal, an estimated amount of 1.15m tonnes of fertliser will be imported and 3.2m tonnes will be locally produced against a total demand of 4.58 tonnes.  

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