June 15, 2006	Thursday	Jumadi-ul-Awwal 18, 1427

ISLAMABAD, June 14: The government did not provide any subsidy on petroleum products during the outgoing fiscal year, and in fact earned Rs10bn more revenue than the target of Rs32.6 billion, reveal the budget documents.

The documents also suggest that during the next fiscal year, the government would extend just Rs9 billion net subsidy for all food items including pulses, sugar and wheat to contain widespread inflation in the country.

"This subsidy comes to 0.6pc of the Rs1.5 trillion consolidated national budget and 0.1pc of the GDP, which is just peanut when seen in the context of prevailing inflationary pressures and size of the economy," a senior official of the finance ministry, requesting not to be named, told Dawn.

OIL SUBSIDY: The government has been saying that it picked up Rs68bn as subsidy to control petroleum prices since May 2005 and did not pass on the impact of international market. The budget documents, however, reveal that there was no such subsidy at all.

The documents, however, suggest that the government had targeted to collect Rs32.6 billion as oil and gas development charges during 2005-06. On the basis of actual collections, this estimate has now been increased to Rs42.5 billion.

The collection is about Rs10bn or 31pc higher than the budgeted target. It may be noted that these figures did not include 15pc sales tax and central excise duty. Both these taxes automatically go up with increase in consumer price.

The target for petroleum development levy (PDL) for 2005-06 was put at Rs15.9bn. This estimate has now been revised up to Rs20.24bn on the basis of 11 months of actual collection, showing higher than expected receipts of Rs4.34bn or 27pc higher.

Similarly, the government has now revised its estimates for gas development surcharge to Rs22.3bn on the basis of actual collection against a budget target of Rs16.6bn, showing Rs5.64bn or 34pc higher than the target.

Three senior most officials of the petroleum ministry including federal secretary, additional secretary and senior joint secretary were contacted to explain. One of them declined to comment and two others did not respond.

FOOD SUBSIDY FOR 2006-07: The budget documents suggest that in addition to normal subsidies which have been part of every budget for about a decade on account of power sector losses, fertiliser an amount of Rs9bn has been allocated as additional subsidy for the next year to cope with food inflation.

Even the Rs15bn subsidy as relief to pensioners and government employees allocated for the current year has been reduced by more than one third to Rs10bn for the next year.The distribution of Rs9bn subsidy if provided to 158 million population comes to about Rs75 per person per annum. This is 0.6pc of overall Rs1.5 trillion consolidated budget and Rs8.89 trillion size of the GDP.

For the current year, the government had allocated Rs93bn subsidy which has now been reduced to Rs83bn. For the next year, the size of the overall subsidy has been estimated at Rs109bn.