By The Numbers
Not really a farmer's budget
FINANCE Adviser Mirza Azizul Islam has announced the national budget for the fiscal year 2008-09, the biggest-ever, with a hefty outlay of Tk 99,962 crore, seeking only short-term solutions to the economic malaise arising from a series of crises. This budget is 26 percent bigger than the budget of FY 2007-08.
One of the remarkable features of the budget is its considerable size, though the size of a budget is not determined only by the needs but also by the availability of resources. This budget also has the biggest deficit, which is calculated to be Tk 30,580 crore. The government has set a budget deficit that exceeds the total development expenditure for the given fiscal, and it will have to jump 86% up from the current fiscal year's bank borrowing to meet this deficit.
The budget for FY 2008-09 gives a thrust to poverty alleviation, social safety-net programs, and reduction of regional disparity, and the government has kept Tk 28,500 crore under its direct control to meet the cost of subsidies on fuel, fertiliser, food, and social safety-net. These will surely provide some sort of relief to all concerned.
The government has increased allocation for social safety-net programs by 48%, introducing the guaranteed employment scheme worth Tk 2,000 crore in the new budget. This program will include a large number of poor and lower-middle income group people as beneficiaries.
The finance adviser, while placing the national budget of FY 2008-09 on June 9, said that the government was taking initiatives to put in place a set of policies to minimise misuse of arable lands and bring fallow lands under cultivation.
According to the Bangladesh Bureau of Statistics, there were approximately 202,000 acres of cultivable land in the country in 1983, which had decreased to 143,000 acres by the beginning of 2008. What is quite alarming for the nation is that every day nearly 235 hectares of arable land are being lost. But there is no clear strategy in the budget for protecting the arable lands, which are most vital for food security as well as for farmers' security.
The finance adviser announced that the irrigation subsidy had been doubled in the budget. Farmers using diesel-powered irrigation pumps will get Tk 540 crore as subsidy in the FY 2008-09, as against Tk 250 crore in the outgoing fiscal, to reduce the cost of crop production.
Direct cash subsidy, introduced for the first time in the outgoing fiscal year, was distributed among 6.59 million farmers having land holding of 4.56 million acres across 484 upazilas. But the amount of subsidy was much lower than initially promised. Added to it, there had been lots of complaints about massive irregularities in subsidy disbursement.
The finance adviser proposed keeping Tk 2 lakh to Tk 2.15 lakh as tax-free income for persons having only agricultural income. Besides, he has proposed tax exemption for farmers engaged in various agri-sub-sectors such as fisheries, poultry, cattle breeding and dairy.
Of course, it is a belated acknowledgement of the grave agrarian crisis in the country. But the real farmers will get no benefits from these exemptions. The small and marginal farmers owning below 2.5 acres of land, who comprise over 90% of the farming community, have not been given any special thrust in the budget.
The budget for the FY 2008-09 has set a target of disbursing Tk 9,000 crore as agri-credit, 8% up from Tk 8,308 crore in the FY 2007-08. It is welcome, though not enough. The vast majority of marginal farmers, who go heavily indebted for cultivation, must have easy access to the institutional credits.
Just a day after the announcement of the budget, the government enhanced the selling price of urea and Muriate of Potash (MoP) fertilisers by more than 200% to reduce pressure on the subsidy regime.
The selling price of urea has been increased to Tk 10,000 from Tk 4,800 per ton, while the price per ton for MoP has been fixed at Tk 50,000 as against the previous price of Tk 19,500. Now the farmers will have to pay Tk 10 instead of Tk 6.50 to buy one kg urea and Tk 50 instead of Tk 19.50 to buy one kg MoP, which is sure to dampen the spirit of the farmers as their real income has hardly increased in the interim period.
Fertiliser subsidy worth Tk 3,668 crore has been earmarked in this budget, and the government is planning to bring about a change in the distribution system of the fertiliser subsidy. Instead of selling fertilisers through dealers at a subsidised rate, the government is now considering reaching cash support directly to the farmers so that they can enjoy the benefit. The distribution of cash subsidy must be done properly and in time, under strong supervision of the government agencies.
Farmers in the US get 80% subsidy for cultivation. It is more than 6% in India, 5% in Japan, and 3% in Pakistan. Farmers in Bangladesh had no subsidy for cultivation till 2005. The government distributed Tk 250 crore as subsidy on diesel for irrigation among more than 6.59 million farmers in the FY 2007-08, which is less than 1%.
Farmers in Bangladesh are heavily exploited when they sell their crops. Introduction of distribution channels for the farmers would work better in getting fair price. But the budget has no promise to develop the marketing of agricultural products to ensure fair prices for the farmers.
With the value of the taka eroding fast, and prices of essentials escalating continuously, the farmers of the country along with common people have become targets of the budgetary assault. The farmers have no say in this regard as they have no forum, though they are the overwhelming majority in the country. The budget of the FY 2008-09 has failed to show in clear terms that it is a pro-farmer budget.
The farmers who produced about one crore tons of rice in 1971, now produce more than 2.75 crore tons. But their socio-economic condition remains unchanged. They have no idea about the national budget or about subsidy. What they really need is a stable supply of agricultural inputs like seeds, fertiliser, credit, and fuel for irrigation at affordable prices. They do not like to get only 5 kg of fertiliser after standing in a queue for a whole day.
Though the budget for the FY 2008-09 was prepared with an eye to solving the short-term problems, we feel that the major problems faced by our farmers must be addressed to motivate them to keep themselves fully engaged in cultivation.
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