PESHAWAR, April 24: The NWFP government will give no subsidy on wheat from next financial year, according to official sources.
The wheat-deficient province has been spending a huge amount since 1997-98 in an effort to provide consumers wheat flour at subsidized rates.
The province continued extending relief to flour consumers by providing wheat from official godowns at a price lower than the procurement cost of the commodity (the price at which the provincial government procures wheat from external sources including Passco and Punjab).
However, the facility would be withdrawn from the next financial year in line with a conditionality of the World Bank’s loan agreement signed by the previous provincial government.
The World Bank extended $90m to the province against the three-year roll over reforms programme prepared by the previous provincial government.
The Muttahida Majlis-i-Amal led NWFP government is also expecting to receive the second tranche of $90m from the Structural Adjustment Credit (SAC) facility, during the 2003-04, which requires the NWFP government to bring down its expenditure on account of ‘subsidy on wheat’ to zero level in the next financial year and onward.
The province spent Rs2bn under the head of subsidy on wheat in 1997-98, Rs2.5bn in 1998-99, Rs3.5bn in 1999-2000, Rs3.4bn in 2000-01 and Rs1.5bn in 2001-02.
Though budgetary allocation for expenditure under this head for 2001-02 had been projected at Rs3bn, expenditure ended up at Rs1.5bn after the provincial government introduced a policy to gradually reduce expenditure under the subsidy account.
In continuation with its newly introduced policy measures, the previous provincial government allocated Rs1bn — lowest since 1997-98 — to meet expenditure requirements under the head of subsidy on wheat during the current financial year.
However, major part of budgetary provision for the current financial year, said the sources, would be utilized to manage wheat stocks at the official godowns and clear liabilities payable to the wheat procurement sources. Whereas, Rs309m is meant to extend wheat at subsidized rates from the official godowns to flour mills for passing on the relief to consumers.
