Govt to increase food subsidy

The government will increase the food subsidy in the next financial year to control the price of different essential commodities including rice in the election year.

Following the instruction of Prime Minister Sheikh Hasina, the Ministry of Finance in a recent meeting on the upcoming budget has estimated how much the allocation for subsidy on essential commodities would be increased for the benefit of the low-income people, said sources from the ministry.

According to sources from the Finance Division, the allocation for food subsidy in the next financial year has been estimated at Tk 8,000 crore. In the budget of the current financial year, about Tk 6,000 crore was allocated for food subsidy. An additional Tk 812 crore was allocated later in the revised budget.

The Trading Corporation of Bangladesh (TCB), an organisation under the Ministry of Commerce, sells oil, sugar, pulses and other essential commodities at affordable prices. TCB has started selling products to one crore low-income families since August last. About four crore people in the country are getting its benefits. In the previous financial year, 20-25 lakh families benefited from TCB sales.

In the next financial year, the government will increase the food subsidy to continue the sale of products to one crore TCB family card holders.

In order to control the market of daily necessities and to meet the trade deficit, the government allocated Tk 900 crore subsidy for the sale of TCB products in the current financial year. Earlier, the same amount of Tk 81,84,70,500 subsidy was allotted to TCB in the 2019-20 and 2020-21 fiscal years. Due to the Covid pandemic, there was an increase in the subsidy in these two fiscal years compared to the previous two years. In the 2018-19 fiscal year, the subsidy was only Tk 14,74,15,972.

In the budget meeting, the prime minister mentioned that controlling inflation is one of the main challenges of the next financial year. She advised controlling inflation.

In the meeting, the finance ministry informed the PM that measures are being taken to increase TCB sales for low-income people.

Inaugurating the TCB sales at Badda in the capital on May 14, Commerce Minister Tipu Munshi said, “In order to provide low-income people with essential commodities, Prime Minister Sheikh Hasina has directed to sell oil, sugar and other products through TCB. Now one crore families are buying TCB products once every month.”

He said, “To ensure transparency and accountability, we have decided to convert one crore family cards of TCB into smart cards. A government organisation has been awarded the responsibility to do the job. Hopefully, it will be almost completed within the next six months.”

The soybean oil demand in the country is 11-12 million tonnes every year. TCB sold only about 70,000 tonnes in the last financial year. The annual demand for red lentils is around 6.75 lakh tonnes and the TCB sold 68,000 tonnes in the last financial year. Increasing the sales volume of these products, TCB will play a vital role in keeping the market stable.

A finance ministry official said, “The subsidy to TCB depends on the market situation. The allocation for TCB is estimated among the block subsidy allocations so that the government can allocate as needed.”

He said the decision to sell TCB products at subsidised prices to one crore families was made after the budget announcement for the current financial year. Due to this, the subsidy allocation for the current financial year was increased by 11 times. The allocation in this sector for the next financial year has been estimated keeping in mind that it will increase further.

The finance ministry official said the issue of paddy and rice procurement by the government is considered before estimating the food subsidy allocation. In this last year of the incumbent government, the subsidy in this sector will increase if any programme is taken to supply more rice and increase open market sale (OMS) activities to keep the price of rice bearable.

Sources concerned said the government wants to bring down the price of coarse rice within the purchasing power of people with limited income throughout the next financial year. For this reason, even if the expenditure increases due to food subsidies, the finance ministry will allocate it.

The government will increase the supply of low-priced rice through OMS if the price of coarse rice, after paddy harvesting in boro season, reaches Tk 40 in Dhaka and Tk 42 outside Dhaka. Under the OMS programme, the government sells coarse rice at Tk 30 per kg.

This decision was made at a recent meeting of the Food Planning and Monitoring Committee, chaired by Finance Minister AHM Mustafa Kamal, said sources from food and finance ministries.

They said on the instructions of the PM, one crore TCB family card holders will get 10 kg of rice at Tk 15 per kg every month. It may take about six months to supply rice through TCB after introducing smart cards. However, the government will also keep the OMS programme active as a weapon to intervene in the market price of rice. The yield of paddy was satisfactory this year. So the government will take the initiative to increase rice collection.

According to TCB’s market price data on Wednesday, Swarna and IRRI varieties of coarse rice are being sold at Tk 46-50 per kg in the capital market. According to the information of the Department of Agricultural Marketing, coarse rice is selling for Tk 45-48 in different districts.

The government provides food at affordable prices through the Ministry of Food, Ministry of Disaster Management and Relief and Ministry of Commerce. Till April 20 of the current financial year, the food ministry and the disaster management ministry have distributed 24,76,000 tonnes of food (rice and wheat) at affordable prices under various programmes.

Besides, the commerce ministry has provided about 2,10,000 tonnes of food through TCB. TCB plans to supply 2.75 lakh tonnes of food this fiscal year.

According to the information from the food ministry, the government has decided to increase the supply of food at affordable prices. The Food Department will conduct OMS wherever necessary to maintain market stability and meet the needs of low-income people. For this reason, additional subsidies will be provided to the food sector in the next budget.

The government expects to produce 2.15 crore tonnes of rice in the current boro season. Around 2.02 crore tonnes of boro paddy was produced in the last boro season. This year the government’s rice and wheat procurement target from domestic sources has also been increased. Besides, the government has increased the collection price of paddy and rice.

The Food Planning and Procurement Committee (FPMC) meeting held on April 5 decided to procure four lakh tonnes of paddy at Tk 30 per kg and 12.5 lakh tonnes of parboiled rice at Tk 44 per kg during boro season.

The government has set a target to procure one lakh tonne of wheat at Tk 35 per kg this year.