Agricultural – as Considered in National Budget | 2017-06-17 |

Agricultural – as Considered in National Budget

Jiban Krishna Biswas Ph D

    16th June, 2017 11:52:26 printer

Agricultural – as Considered in National Budget

Jiban Krishna Biswas Ph D

The budget for the fiscal year 2017-18, the highest ever since the independence, has been proposed before the parliament.  The first budget was presented in 1972-73 with an amount of BDT 786 crores for 75 million people. The present one is BDT 426,600 crores, exactly 543 times more than the first one for the 160 million people.

Since 2009 to 2017, the expansion of budget follows a highly significant (R2 = 0.99) exponential upward trend. It means the upcoming budgets would be bigger in size if nothing goes wrong with the ongoing system. The burgeoning budget conveys a message to us that the government also has achieved the ability to handle the huge economic transaction of the country.


Bangladesh is traditionally an agricultural country. So the allocation in the agricultural sector must be a significant one. The agriculture sector was given BDT13,600 crores, (3.40% of the total proposed budget) to expand. Many of the economists and philanthropists are not much happy with the amount allocated for the agriculture sector.  In the previous year (2016-17) the allocation for agriculture was BDT 13,676 crores. The allocation was BDT 75 crores less than the proposed budget of the previous year but far ahead (BDT 3,124 crore) of the revised budget (BDT10376 crores). If the trend goes alike the revised budget might be little higher than the current year. The share of the agricultural budget was 8.44% in 2012-13. Now in proposed budget it is 3.40%.  It appears that there is a negative relationship between budget size and the allocation to the agriculture sector (Table).


Table: Budget allocation (in crore BDT) trend for the Ministry of Agriculture (MOA)


The subsidy was BDT 12,000 crores, the highest in 2012-13 (6.34% of the total budget) was reduced to BDT 8,973 crores (4.15% of the total budget) in the next year. The subsidy was further reduced to around BDT 7,000 crores in the 2014-2015 and 2015-2016, corresponded to 2.96 and 2.65%, respectively of the total budget. In 2016-17, the subsidy was raised to BDT 9,000 crores equivalent to 2.64% of the total budget. The recent budget has a subsidy proposal of BDT 9,000, 2.10% of the total budget. The agriculture with time has to encounter a lot of challenges like population increase, increasing climatic adversaries, yield ceiling of HYV crops, declining of soil productivity, the insurgence of new pest and diseases, increasing anarchy in the marketing channels, and so on and so forth. In contrast, it is visible from the trend that the share of the budget to cope with all these challenges is reducing year after year. In the case agriculture research the allocation appears to be quite mediocre. As per Dr J Alam, one of the famous agricultural economists and academicians, mentioned in one of his pre-budget speeches recently that the per head research expenditure in our country is only 34 cents compared to those of 12 dollars in the developed countries. The amount is equivalent to 0.33 per cent of the agricultural GDP. Out the allotment, most of the money is spent for salaries and allowances. So, a little is left to carry on the research activities. Agriculture is a dynamic science. It cannot proceed further without contemporary research activities. That is why he insisted on increasing the research allotment at 2 per cent. BRRI economists though work on rice but they think about the whole agriculture, were insisting categorically for more budgetary allocation for agriculture and agriculture research. The have asked more budgets to strengthen the National Agricultural Research System with special emphasis to cope with the natural calamities, special allotment for human resource development and establishment of more crop specific research institutes, research initiative on nano-agriculture in the NARS system, hiring expert and experienced scientists from home and abroad to work for the nation etc. They deserve significant investment to establish a more farmer-friendly credit disbursement system, farmers’ easy access to marketing channel, providing cost of living assistance (COLA) to the marginal and resource poor farmers to keep their produce with them during the prime harvesting time when the price goes down, crop insurance for the farmers of the fragile environments, erection of more storage facilities,.


Dr Alam has addressed the issue of increasing budget and the conservative attitude of the personalities behind it towards agriculture. He says that the budget allocation for agriculture sector is not in alignment with the increase of the total budget. Since 2010-11 to 2017-18, the total budget has increased more than 160 per cent. In contrast, the allocation in agriculture has increased merely 99.0 per cent over the same time span. He also mentioned that the agriculture growth is not encouraging in the recent years.  In 2009-10, the growth of 7.57% in the crop sector (total agriculture sector 6.55%) reduced to 0.88% (total agriculture sector 1.79%).  He goes into further detail. He is afraid on the issue of achieving the estimated agricultural growth 2.51% for total agriculture and 1.72% for crop sector as expected in the recent budget proposal. Because the estimation has yet to include the crop loss due to recent early flash flood in the haor area and the loss due to neck blast in the certain part of the country. However, the estimation was done on the hypothesis that the recent catastrophe might not have any significant impact on the total production of rice.



Having all these criticism and expectations, it appears that the government is struggling to achieve the target. The finance minister is quite ambitious to see Bangladesh as one of the top thirty economies of the world within two decades. So far, the country is now in a position to claim as a lower middle-income country. The next steps are upper middle-income country and higher income country. We have a dream to reach up to the higher income level by 2041. The present per capita income is US$ 1664. With this progress, many of us are a little bit confused whether it is possible to reach the target or not by the specified time. Let us have a look how to define a middle and high-income country.  As per world bank, lower-income economies are those with Gross National Income (GNI) per capita between $1,026 and $4035; upper middle-income economies are those with a GNI per capita between $4,036 and $12,475; high-income economies are those with a GNI per capita of $12,476 or more ( Now you could justify our present speed to be a developed country by 2041. If you are confused please find a way how to reach out there. However, the minister is quite ambitious. He says, “A lot of foreign investments are coming. We are encouraging the launching of various Innovative Financing Mechanisms. The expanding trade and commercial activities etc. are in consideration also”. So, at least we should not be pessimistic though there is lot of hue and cry regarding some of his policies on tax, VAT, bank deposit, saving certificates etc.   As a layman, I must say the huge budget is to create more mobility of money to create more employment opportunity for better living. So the intellectuals must advise the government with the constructive suggestions. If necessary the ultimate target to get the country as a developed one by 2041 may be revised a little based on the SMART (specific, measurable achievable, relevant and time-bound) strategy. But they have to consider at first sight that agriculture is the foundation of our economy.  Why? As per the Department for International Development (DFID), agriculture can contribute to poverty reduction beyond a direct effect on farmers’ income. Agricultural development can stimulate economic development outside the agriculture sector also and lead to higher job and growth creation. Increased of agriculture raises farm incomes, increases food supply, reduces food prices, and provide greater opportunities in both rural and urban areas.


Just a few examples of some innovative ideas in the rearrangements of budget allocations in agriculture: Farmers’ were familiar with the term balanced fertiliser of urea, TSP and MP. But they could not afford all these three fertilisers at a time. So they had to satisfy most of the times with one fertiliser, urea only. Subsidy helps to reduce the fertiliser price to a level easily affordable by the marginal farmers. Thus the farmers started to use balanced fertiliser to have their bumper harvest for few years and they are habituated with the practice now. The result is self-sufficiency without putting a little stress on the national economy. There are some more cases like mechanisation at the grassroots level; the subsidy is working very well with a return of significant output. The proposed budget has the plan to subsidise 70% for the haor and coastal belt farmers and 50% for the farmers of the rest of the country.


The government also supported irrigation, controlling fuel and fertiliser price hike, improved loan distribution policy (loan deposited directly to farmers’ account operated with 10 Taka only), well-organised fertiliser supply, increased quality seed supply by public and private sectors and technological interventions play a significant role in self-sufficiency in rice and the other crops also. These were the success stories possible because of the extra efforts given to budget.


Accordingly, I am sure, the present government realises the importance of agriculture from the onset of its journey. The minister cites in his budget speech that the measures will be taken against shrinking of agricultural land. He assured that the ongoing programme like innovation of rice varieties tolerant to adverse climate, reduction of post-harvest damage to crops, establish agricultural industries, supply of improves quality of seeds, irrigation extension, establishment of quarantine centres to ensure safe and risk-free imports, introduction of genetically modified technology, innovation of adversity tolerant jute, research for innovation of diversified jute products, increasing the use of renewable energy in agricultural sector and modernization of value chain system in this sector would be strengthened. Alongside, the minister says, the government has a plan to set up 235 Farmers Service Centres all over the country to take the outcomes of agricultural research, agricultural information and technology, and services to the doorsteps of the farmers.


More so, zero rate custom duty has been retained in the inputs like fertiliser, seeds, and insecticides. In contrast, the highest rate of customs duty on rice will continue so that farmers get the fair price of their product. Even a customs duty on the raw materials is fixed only 1% so that local industries could fabricate machinery to make them available to the farmer cheaply. All these are the very positive sides of the budget compel to feel us the budget is on the right track.


Still, some more remaining like COLA, crop insurance, strengthening research facilities of NARS with more trained human resource, more crop specific institutes, research initiative on nano-agriculture etc to be considered as desired by BRRI economists. We are looking ahead to the revised budget or the upcoming budget to address at least some of these issues mentioned here.


In conclusion, I like to say that the ongoing share of the budget in agriculture has paved the foundation of the economy; an increased share would build up a stout structure of the economy as a whole.


The writer is the former Director General, Bangladesh Rice Research Institute, Gazipur