Rs10bn subsidy approved to tackle food inflation

Updated February 12, 2020

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Cabinet lifts ban on sugar import, refuses to accept FIA report on wheat flour, sugar crises. — APP/File
Cabinet lifts ban on sugar import, refuses to accept FIA report on wheat flour, sugar crises. — APP/File

ISLAMABAD: In order to reduce the impact of food inflation on the people, the federal cabinet on Tuesday approved a comprehensive package under which Rs10 billion subsidy will be provided to the Utility Stores Corporation (USC), thousands of stores will be opened, consumer items at subsidised rates will be supplied to 50,000 tandoors and dhabas, and ration cards will be distributed among deserving people.

To address sugar crisis in the country, the cabinet meeting, which was presided over by Prime Minister Imran Khan, lifted the ban on sugar import and regulatory duty on it. However, the cabinet did not accept the Federal Investigation Agency (FIA) report on the wheat flour and sugar crises, directing it to submit a comprehensive one next month.

The cabinet in its meeting decided to establish five “free zones” along the Pak-Afghan border, where the USC will set up its stores to control smuggling.

Under the Rs10bn subsidy, a 20-kg bag of wheat flour will be sold for Rs800, sugar will be priced at Rs70 per kg, ghee at Rs175, pulses at Rs15 and rice will be available at Rs20 per kg at utility stores.

The cabinet agreed that rupee devaluation against dollar and increase in gas and electricity tariffs were some of the reasons for unprecedented food inflation in the country and thus decided that there would be no further increase in gas and electricity rates in the near future.

Cabinet lifts ban on sugar import, refuses to accept FIA report on wheat flour, sugar crises

It was disclosed at the meeting that only Rs40 billion of the Rs190 billion government’s flagship programme, Ehsas, had so far been spent, while the remaining Rs150 billion would have to be spent within the next four months as the funds would lapse in June 2020. It was decided, 100 more Lungar Khanas would be set up under Ehsas.

“The comprehensive relief package will break the back-to-back inflation in the country,” claimed Special Assistant to the Prime Minister on Information and Broadcast Dr Firdous Ashiq Awan while addressing a press conference following the cabinet meeting.

For the next five months, she said, the government would provide Rs2bn monthly subsidy to the USC for wheat flour, rice, sugar, pulses and ghee. She said: “The basic objective to give Rs10 billion subsidy is to ensure sufficient supply of food items through utility stores.”

Asked under which head Rs10 billion would be given to the USC, she said it would be released by the finance division or from the fund of Ehsas programme.

Responding to a question, Dr Awan agreed that increase in gas and power tariffs was one of the main causes of inflation and held the last Pakistan Muslim League-Nawaz (PML-N) government responsible for it. “International agreements inked by the last government for import of Liquefied Natural Gas and electricity agreements with Independent Power Plants increased gas and electricity tariffs and the present government has to abide by these agreements under international obligations,” she added.

She said the USC would establish 12 mega cash and carry super stores in major cities of the country on a public-private partnership basis.

She said initially 2,000 youth stores would be set up under Kamyab Naujawan Programme and the USC would supply them consumer items at reduced rates. “The government has planned to establish 50,000 such stores in the next two years, because it will directly provide employment to over 400,000 youth and benefit over 800,000 people indirectly,” she added.

Talking about the government’s Ration Card Scheme, she said ration cards would be issued to deserving persons before the holy month of Ramazan. “Under this scheme, people will get essential items at 25 to 30 per cent discounted rates,” she added.

Asked why PM Khan did not take any action against those responsible for the sugar and wheat crises, the special assistant to the prime minister said she knew that the nation was waiting for such an action from the PM. However, she added, the report presented before the cabinet by the FIA was not rejected by Mr Khan, as he wanted a “comprehensive” probe in this regard to fix responsibility on each and every persons involved in the crises. “The FIA has been directed to submit an independent report to the cabinet in the first week of March,” she said.

As the government lifted the ban on import of sugar, she said anyone could import the commodity. “We took this decision to flood the market with sugar to teach a lesson to those who have hoarded tonnes of sugar in their godowns,” she said.

The meeting decided that the government would use Pakistan Agricultural Storage and Services Corporation as a reservoir to store sufficient quantity of essential items so that in times of crisis these reserves could be utilised.

Published in Dawn, February 12th, 2020