ISLAMABAD: Under an agreement with the IMF, the government has reduced the size of subsidies being offered to various sectors to Rs137.6 billion in the budget for 2015-16.

No subsidy will be available on wheat and salt for the people of Gilgit-Baltistan. The government had provided Rs850 million and Rs5m, respectively, as subsidy on wheat and salt to the region in the outgoing fiscal year to prevent exploitation by market manipulators and ensure availability of the commodities at affordable rates.

But no amount was kept under this head for the next financial year.

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The government has set aside an amount of Rs303m for purchase and maintaining wheat stocks in Fata. The allocation was Rs293m for the outgoing year.

The subsidy to the power sector has been reduced by almost 50 per cent to Rs118bn from last year’s Rs221bn. A major chunk of Rs98bn will go to Wapda and Pepco. The two companies were provided Rs156.10bn as subsidy for the outgoing fiscal year, but it went up to Rs185bn.

K-Electric has been allocated Rs20bn, compared to Rs36bn, in terms of tariff differential obtained by the company in the budget for 2014-15.

Apart from the power sector, the main subsidy has been granted to counter food inflation through Utility Stores, but despite various inflationary factors the allocation of Rs3bn for Ramazan package and Rs4bn for sale of sugar remains the same as it was in 2014-15.

The subsidy to Passco for wheat purchase, maintaining reserved wheat stock, freight subsidy on sugar, etc, has been increased to Rs11.3bn from Rs10.85bn.

Published in Dawn June 6th, 2015

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