Govt likely to earmark Rs270bn in subsidies for FY21

ISLAMABAD: The federal government is likely to earmark Rs270 billion under the head of ‘subsidies’ for the next fiscal year (FY2020-21), Pakistan Today has learnt.

According to sources, the Ministry of Finance, in its budget strategy paper for the next fiscal year, has proposed to keep Rs250 to Rs270 billion for subsidies in FY21.

The figure is slightly less than the amount allocated for the same in the ongoing fiscal; the government had allocated Rs271.5 billion for subsidies in FY20 budget.

Sources said due to the rise of coronavirus pandemic in the country, the government would spend most of the amount on pro-poor initiatives. In addition, they added, the government would allocate a major amount to the agriculture sector, keeping in mind the value of farmers in Pakistan’s economy.

“The government has earmarked Rs15.5 billion for PASSCO, Rs2 billion for wheat operations, Rs5 billion for wheat reserved stock, Rs8 billion for wheat supplied to Gigit-Baltistan and Rs500 million for the reimbursement on account of donation of wheat by the government,” said an official privy to this development.

Meanwhile, it was learnt that the finance ministry has also proposed giving a major subsidy to the power sector in order to facilitate the consumers.

The government had kept Rs191 billion in subsidy for the power sector in the budget FY20. This included Rs162 billion for interdisco tariff differentials, Rs8 billion for tariff differentials for agriculture tube-wells in Balochistan, Rs18 billion to pick Wapda receivables from merged districts of KP, Rs3 billion to Wapda on account of tariff differential for A&JK and Rs59.5 billion for K-Electric.

Sources also said that the Ministry of Finance was likely to allocate up to Rs150 billion for support of the merged district of KP.

They said the subsidies would be kept separated from the recently announced Rs1.2 trillion stimulus package to mitigate the effects of coronavirus.

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