ISLAMABAD: The government has allocated Rs 1,186.036 billion in subsidies for the financial year 2025–26, compared to Rs 1,378.449 billion allocated in the outgoing FY 2024–25, reflecting a decrease of approximately 14%.
According to budget documents, a significant portion of the subsidy allocation, Rs 1036.136 billion has been earmarked for the power sector in FY 2025-26 as compared to Rs 1190 billion allocated in the outgoing fiscal year with 13.8 percent reduction.
The breakdown for the power sector subsidies includes Rs 249.136 billion for inter-disco tariff differentials, Rs 74 billion for tariff differentials to AJK, Rs 1 billion for K-Electric for tube well subsidy in Balochistan , Rs 4 billion for PEPCO under tariff differential, and Rs 40 billion for subsidies to the merged districts of KP, formerly FATA.
Additionally, the power sector subsidy includes a lump sum provision of Rs 400 billion under various heads such as GPPS Equity, electric revenue shortfall of AJK, TDS KE arrears, FATA subsidy arrears, and additional subsidies for the next fiscal year.
The government has made a drastic cut in petroleum subsidies from Rs 18.400 billion allocated in outgoing fiscal year to only Rs 1.2 billion in the next fiscal year with over 175.5 percent reduction as the same is only allocated to cover the shortfall in guaranteed throughput of PEPCO.
In the next budget, Rs 20 billion have been allocated for PASSCO in the next financial year as compared to Rs 12 billion allocated for maintaining wheat reserve stocks and covering the cost differential for wheat sales in the outgoing fiscal year with over 66 percent increase.
For industries and production, only Rs 24 billion have been allocated for next fiscal year as compared to Rs 68 billion allocated in the outgoing financial year which included Rs 9 billion for subsidy incentives for electric vehicles and the Utility Stores Corporation (USC) sugar subsidy arrears.
Other subsidies amounting to Rs 104.7 billion include Rs 20 billion for wheat subsidy to GB, Rs 15 billion for the import of urea, Rs 1 billion for the Naya Pakistan Housing Authority, Rs 7 billion under Kissan package, Rs 1 billion for Refinance and credit guarantee scheme, Rs 5.4 billion for SME sector, Rs 30 billion for markup subsidy to support phasing out of SBP refinancing facilities, Rs 3 billion for provision of 5km radius gas scheme, Rs 5 billion for EFS enhanced plan-exim and related scheme, Rs 5 billion for markup subsidy for low cost housing, Rs 5 billion for housing sector subsidy and Rs 7.3 billion for metro bus subsidies
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