Budget FY21: Govt reduces subsidies despite Covid-19 impact

ISLAMABAD: The federal government on Friday announced the budget for the fiscal year 2020-21, revealing that subsidies have been reduced from Rs349.5 billion for the outgoing year to Rs209 billion for the upcoming year, despite the economic impact of the coronavirus outbreak on the masses.

According to the budget documents, the government has allocated 59.33 per cent subsidy for WAPDA/PEPCO, followed by 14.36 per cent for Naya Pakistan Housing Authority, 12.2 per cent for KESC and 3.35 per cent for PASSCO.

Rs124 billion have been allocated for WAPDA/PEPCO against Rs201 of the outgoing year. Federal Minister for Industries and Production Hammad Azhar told the National Assembly (NA) on Friday that Rs149 billion have been allocated for protecting those who use 300 or less units of electricity every month from power tariff hike.

A breakdown of this figure showed that Rs110 billion have been allocated for inter-Disco tariff differentials as compared to Rs162 billion of the outgoing year. The government has allocated Rs3 billion for tariff differentials for agriculture tube-wells in Balochistan, Rs10 billion for picking up WAPDA/PEPCO receivables from the merged districts of Khyber Pakhtunkhwa (KP) and Rs1 billion for WAPDA on account of tariff differential for Azad Jammu and Kashmir (AJK). Rs25 billion have been earmarked for KESC for the next fiscal year compared to Rs59.5 of the outgoing year.

The documents showed that the subsidies for the power sector have drastically been decreased for the upcoming fiscal year as compared to the previous years. Moreover, unlike the previous years, no subsidy has been given to the petroleum sector.

Interestingly, despite the impact of coronavirus, the government has reduced the subsidy on food items at the Utility Stores from Rs43.5 billion to Rs3 billion. During the outgoing fiscal year, the original subsidy estimate was Rs5.5 billion but the government gave Rs43.5 billion subsidy to the Utility Stores. However, for FY21, Rs3 billion have been allocated for the Ramzan package, while there would be no subsidy on other items for the rest of the year.

According to the documents, the government has decreased the subsidy given to PASSCO from Rs15.5 billion to Rs7 billion. It has allocated Rs2 billion for wheat operations, Rs5 billion for reserving wheat stock, Rs6 billion for giving subsidy on wheat to Gilgit-Baltistan, Rs2 billion on Metro Bus and Rs6 billion for fertilizer plants.

It is worth mentioning here that the government has not given any subsidy to the National Food Security and Research Division for the next fiscal year.

Ghulam Abbas
Ghulam Abbas
The writer is a member of the staff at the Islamabad Bureau. He can be reached at [email protected]


  1. It is great strategic to reduce subsidy on different sectors. It will have great impact upon economy.

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