Tk1.10 lakh crore proposed for power, agriculture subsidy
Despite repeated price hikes for electricity, gas and fuel, the government just cannot come out of subsidy.
The proposed budget speech states that the estimated amount of subsidy is Tk110,987 crore for the 2023-2024 fiscal year.
The budget document says that the burden of subsidy expenditure will take some time to fully subside due to accumulated arrears.
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Therefore, the government requires increasing the amount of power and agriculture subsidies in the next financial year as well.
However, the government believes that the total subsidy will gradually decrease in the medium term following the recent price hikes and the implementation of the upcoming formula-based price adjustment mechanism.
A road map is being formulated to establish a permanent system of formula-based price adjustment in the energy sector which will enable the government to adjust fuel prices every quarter.
"We hope to finalise the formula-based price adjustment system by September this year," reads the budget document.
According to the budget document, Bangladesh expects to ensure 40,000 megawatts of electricity generation by 2030 and 60,000 megawatts by 2040.
In the revised budget, the subsidy allocation was increased to 2.2% of the GDP, due to excessive increases in the prices of fertilisers, fuel and gas in the international market; though, the allocation was 1.83% of the GDP in the budget for FY 2022-23.
However, in the pre-war years' allocation for subsidies and incentives was limited to an average of 1.0% of the GDP.
