In a bid to tame inflation, assist poor people in coping with rising prices and ensure food security, the government has decided to allocate Tk5,169 crore in subsidies in the next fiscal year to operate the open market sale (OMS) of food items, according to Ministry of Finance sources.
The majority of the funds will be used to implement a food-friendly programme that sells rice at a subsidised rate of Tk15 per kilogramme for low-income individuals in rural areas and Tk30 per kilogramme in city corporations, municipalities, and district towns.
Additionally, the distribution of subsidised rice among one crore families under the "Family Card Programme" will continue in the next fiscal year - directly benefiting around 5 crore low-income people.
Officials at the Ministry of Food said the Directorate General of Food was allotted Tk5,009 crore in the current fiscal year as food subsidy and the amount was increased to Tk5,492 crore with an increase of 9.64% in the revised budget.
The allocation for the OMS food subsidy in the next fiscal will increase by 3.20% compared to the original budget of the current fiscal but will be reduced by 5.87% compared to the revised budget, they said.
Government will adopt a contractionary approach to spending for procuring food in the next fiscal year like the spending for the OMS programmes, revealed the budget document of the Ministry of Food.
The expenditure in this sector is to increase by only 0.96% in the next fiscal year compared to the original budget of the current fiscal.
According to the review of the budget proposal, the directorate is to procure food worth Tk14,235 crore in the next fiscal year which is only Tk136 crore higher than the current fiscal allocation of Tk14,099 crore.
Imports from abroad are to be prioritised over domestic purchases of food in the upcoming fiscal, while the target is set to increase allocation for import by 10% and reduce the allocation of domestic purchases by about 4%.
The finance ministry is set to propose Tk8,742 crore in the next financial year for procuring foods from domestic sources with a decrease of Tk358 crore from the existing budget.
On the other hand, a total allocation of Tk5,494 crore is to be proposed by adding Tk494 crore to the current fiscal year's allocation of Tk5,000 crore for food imports.
While more than 51% of the food import expenditure is estimated to be spent on wheat import, nearly 100% of the domestic food procurement expenditure will be rice procurement.
Economists have urged for a substantial increase in the allocation for food procurement and distribution considering the recent upward trend of inflation and the suffering of poor people to meet the cost of living.
They said that low-income people are forced to cut spending on things like education, health and nutrition to meet the cost of food. In this situation, it was necessary for the government to show generosity to increase the lower-cost food supply.
According to data from the Bureau of Statistics (BBS), inflation has remained above 9% for the past 14 months and the moving average inflation for the last year stood at 9.74%.
BBS officials said that the food price contributed significantly to increasing the overall inflation while the average food inflation for the last year stood at about 10.5%.
The budget proposal of the food ministry revealed that the directorate general of food to secure the collection of about 32 lakh tonnes of food grains through import and domestic procurement aiming at a healthy food security network in the country.
Directorate of Food is set to sell around 15 lakh tonnes of food at subsidised prices through food-friendly programs and OMS operations to stabilise food grain prices.
Through various programmes under the Ministry of Food, about 27 lakh tonnes of food will be supplied next year.
According to sources, the food directorate provides food items at 30% of the market price under the food-friendly programme and at 70% under the OMS programme where flour is supplied at almost half of the market price.
