Sources said the agriculture ministry will seek prime minister's intervention to resolve the issue.

The ministry also has decided to allocate Tk 600 crore in direct subsidy for fertiliser from its own coffers in FY 2005-06, following the current pattern.

The government recently disbursed Tk 6,620 crore, the ministry's budget for the next three years, in advance for better programme planning and implementation. Of the sum, Tk 1,985 crore is earmarked as its budget for FY06, outlying a Tk 1,395 crore revenue expenditure and Tk 589 crore for development work.

But the ministry finds the budget, which does not allocate any subsidy for diesel used for farming, inadequate. The resource constraints also have forced it to limit the next year's fertiliser subsidy, its officials said. "We wanted a bigger subsidy. But the amount we have received for the next three years does not allow that," said one of them.

The current national budget initially allocated Tk 600 crore for fertiliser subsidy. In the revised budget, yet to be approved, the amount has been increased to Tk 614 crore, with Tk 376 crore for urea and Tk 271 crore for other fertilisers, and Tk 7 crore for sugarcane farming.

The three-year budget of the ministry assigns Tk 650 crore farm subsidy for FY07 and Tk 700 crore for FY08.

TUG OF WAR ON DIESEL SUBSIDY
The agriculture ministry has for long been arguing with the finance ministry in favour of a diesel subsidy.

The finance ministry believes diesel subsidy is a waste, as many of the recipients use it for purposes other than irrigation, like running motorised boats and other transports.

The agriculture wing, on the other hand, argues that measures can be taken to ensure that the subsidy reaches only the true farmers, which would scale down the irrigation cost.

"Farm subsidy in our neighbouring countries is much higher than ours. Pakistan spends more than 300 million dollars and India as much as 10 billion dollars for this purpose," pointed out an official.

"Besides, as per the World Trade Organisation rules, there are much scope to increase agri-subsidy. They suggest it can be up to 10 percent of the agricultural GDP. Compared to that, the current Tk 614 crore farm subsidy is less than 1 percent," he went on.

Back in January, when the government raised the diesel price by Tk 3 per litre, the agriculture ministry expressed concern, saying it would affect agricultural production, and proposed a 25 percent subsidy for the diesel used in agriculture.

But the finance ministry did not respond positively.

Now, as the government mulls another round of diesel and petroleum price hike, the agriculture ministry has decided to appeal to the prime minister to arrange for a diesel subsidy for the agriculture sector subsequent to the hike.

"According to our survey, there are around 11 lakh deep and shallow tube-wells across the country," said the official. The Department of Agriculture Extension and Bangla-desh Agriculture Development Corporation are now preparing a list of farmers using these wells, which will be completed by next month, he said.

The ministry will bring the whole situation to the PM's knowledge, he added.