ISLAMABAD: The federal government has reduced subsidies for the upcoming fiscal year by Rs192 billion or 14 per cent to Rs1.18 trillion, mainly by cutting financial support to the Ramazan package and the agri tube wells in Balochistan.

The budget documents reveal that the government has allocated Rs9bn for incentives under the electric vehicle scheme. However, the Ramazan package has been withdrawn.

Whereas in the outgoing fiscal year, Rs18bn was spent on the Ramazan package and Rs42bn on the PM package and arrears through the Utility Stores Corporation. However, Rs15bn has been allocated in terms of sugar subsidy arrears to the utility stores. The subsidies to fertiliser plants, too, have been abolished.

However, the government has plans to invest in food security and in the next budget, Rs20bn has been allocated for Pakistan Agricultural Storage & Services Corporation Ltd (Passco), compared to Rs12bn spent in 2024-25 mainly for maintaining wheat reserve stocks.

Major chunk goes to power sector

The bulk of subsidy allocation of Rs1.03tr has been earmarked for the power sector compared to Rs1.19tr spent in the outgoing fiscal year, a reduction of 13.8pc.

The principal cut has been made in tariff differentials to AJK, to Rs74bn compared to Rs108bn in the outgoing fiscal year.

The breakdown for the power sector reveals that subsidies have been reduced in almost all heads: Rs249.13bn is allocated for inter-Disco tariff differentials against Rs276bn spent last year; Rs5bn for tube well in Balochistan compared to Rs10bn in the outgoing year.

The government has allocated Rs40bn for the merged districts of Khyber Pakhtunkhwa (KP), formerly known as Fata. Additionally, a power sector subsidy includes a lump sum provision of Rs400bn under various categories.

The government has made a drastic cut in petroleum subsidies from Rs18.40bn in the outgoing fiscal year to Rs1.2bn for the upcoming fiscal year. It has allocated Rs10bn for domestic consumers of Sui Northern Gas Company.

The other subsidies amounting to Rs104.7bn, include Rs20bn for a wheat subsidy to Gilgit-Baltistan, Rs15bn for the import of urea, Rs1bn for the Naya Pakistan Housing Authority, Rs7bn under Kissan package, Rs1bn for refinance and credit guarantee scheme, Rs5.4bn for SME sector, Rs30bn for mark-up subsidy to support phasing out of SBP refinancing facilities, Rs3bn for provision of 5km radius gas scheme, Rs5bn for EFS enhanced plan-exim and related scheme, Rs5bn for mark-up subsidy for low-cost housing, Rs5 bn for housing sector subsidy and Rs7.3 bn for metro bus subsidies.

Whereas there is no allocation for the ‘Mera Pakistan Mera Ghar Scheme’ compared to Rs21.08bn spent under this head in the outgoing fiscal year.

Published in Dawn, June 11th, 2025