ECC okays Rs106bn food subsidy to help 20m families

Published December 18, 2021
A view of the meeting of the Economic Coordination Committee (ECC) on Friday. — Photo via Economic Affairs Division Twitter
A view of the meeting of the Economic Coordination Committee (ECC) on Friday. — Photo via Economic Affairs Division Twitter

ISLAMABAD: The Eco­nomic Coordination Commi­ttee (ECC) of the cabinet approved an amount of Rs106.1 billion on Friday to subsidise three essential food items — flour, pulses and cooking oil or ghee.

The subsidy — to be available for six months from Jan 1 to June 30 at registered grocery shops — is likely to benefit at least 20 million families.

At a meeting chaired by Federal Minister for Econo­mic Affairs Omar Ayub Khan, the committee appro­ved the Poverty Alleviation and Social Safety (PASS) division’s Ehsaas Rashan Riayat (ration concession) subsidy programme.

The programme will be implemented in Punjab, Khyber Pakhtunkhwa, Azad Jammu and Kashmir, and Gilgit-Baltistan. Sindh and Balochistan have declined to be part of the targeted subsidy programme.

According to official estimates, out of the total programme’s budget of Rs106.012bn, the federal government’s share was supposed to be Rs46.987bn. However, after the exclusion of Sindh and Balochistan, the federal share would come in at Rs32.055bn.

Special Assistant on Social Protection and Poverty Alleviation Dr Sania Nishtar told Dawn that the programme would mainly benefit families and registered retailers. She said talks over the implementation of the programme were at advanced stages with Sindh and Balochistan.

The programme will cover subsidies for beneficiaries, incentives for kiryana stores (small- and mid-sized mom-and-pop groceries), SMS charges for telecom operators, verification charges to the Pakistan Mobile Number Portability Database company, and National Database and Registration Authority, mobilisation charges, National Bank of Pakistan (NBP) costs, and other operational expenditures.

Under the programme, a subsidy of Rs1,000 a month will be granted to 20m eligible families on the purchase of flour, pulses and cooking oil. The subsidy amount will be Rs22 per kg on flour, Rs55 per kg on pulses, and Rs105 per litre on cooking oil or ghee, Ms Nishtar said.

Ms Nishtar said individuals are being registered online against their CNICs through a toll number 8171. Each person’s data will be verified through the Ehsaas National Socio-Economic Registry Survey to identify deserving cases. The drive will continue until Dec 30, and those finalised will be informed through an SMS on their registered mobile numbers.

A similar registration exercise is under way for kiryanas. It will be mandatory for these grocery stores to have a bank account to avail the programme. Ms Nishtar said the authorised grocery merchants who have bank accounts would install a mobile point-of-sale (mPOS) application on their cell phones to track the eligibility of eligible buyers and pass on the subsidy.

She said the subsidy programme on utility stores would continue but the focus would be on mPOS, which has a wider reach to the public.

According to the Kiryana Incentive Scheme, approved by the ECC, stores located in communities with an average monthly income of less than Rs30,000 per family will be registered for the targeted subsidy. Ms Nishtar said it would be an indicative benchmark for selecting the right stores to avail the incentives and avoid misuse of the facility.

Under the scheme, a subsidy amount of eight per cent of the transaction value will be offered to these registered stores as commission so that shopkeepers and sellers are encouraged to serve more and more beneficiaries under the programme.

An ECC announcement said that in pursuance of the cabinet’s decisions, extensive efforts were undertaken, including field visits, market surveys, and meetings with local shop owners and traders’ associations in several cities.

In addition, wide-ranging consultations were held with relevant provincial and federal stakeholders. Resultantly, the program design document has been amended to ensure compliance with the cabinet’s decisions and address the concerns of stakeholders.

Further, the PASS division and the NBP have also started mobilising efforts to register beneficiaries and merchants.

To implement this program, the PASS division will sign a memorandum of understanding with the NBP and will reimburse all relevant costs incurred by the bank on a monthly basis, subject to an independent audit and authorisation by the programme’s steering committee.

The PASS division will hire one of the top accounting firms as an external auditor to review all transactions, including subsidy and vendor payments, processed on a monthly basis. The three items covered under the program are essential commodities with inelastic demand, and therefore the adoption of local prices will be allowed for the disbursement of the fixed per-unit subsidy.

Published in Dawn, December 18th, 2021

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