Subsidies increased by two percent to Rs 140.6 billion








The federal government has increased subsidies by slightly over 2 per cent to Rs 140.6 billion for fiscal year 2016-17 against Rs 137.603 billion budgeted for the current fiscal year.

Budgeted subsidy for the current year is understated for some items (K-electric) and over stated (example oil refineries and OMCs) for other items in the revised estimates. According to revised estimates for 2015-16 the amount of subsidies increased to Rs 196.541 billion. If the budgeted allocation for 2016-17 and revised estimates are compared, the subsidies are 28.4 per cent less than actual allocations.

According to budget documents, subsidy to Wapda/ Pepco has been proposed to be slashed by 2.65 per cent to Rs 95.4 billion in 2016-17 from Rs 98 billion allocated for 2015-16.

However, the amount of subsidy to Wapda/ Pepco revised upward to Rs 117.805 billion was 19 per cent higher than the amount earmarked for next fiscal year. However, there will be no change in Inter-Disco Tariff Differential as the amount of subsidy for this purpose will be Rs 60 billion for next fiscal year which is at par with the allocations of current fiscal year.

The amount of subsidy for tariff differential for agri-tubewells in Balochistan has been slashed to Rs 8.4 billion in 2016-17 against Rs 9 billion allocated for current fiscal year and revised amount of Rs 10.641 billion. To pick up Wapda/ Pepco receivables from FATA, the government has allocated Rs 8 billion for 2016-17 as compared to Rs 6 billion for 2015-16 which was later revised upward to Rs 20.868 billion.

An amount of Rs 19 billion has been earmarked to pay inter-Discos tariff differential (arrears) for next fiscal year against the same amount of last year. However, Finance Ministry released only Rs 16.316 billion under this head.

The government has not allocated a single penny to pick up Wapda/Pepco receivables from AJK. In the current year Rs 4 billion was allocated for this purpose. Budget documents further disclose that the government has earmarked Rs 22.6 billion to pay subsidy to KE for 2016-17 against Rs 20 billion allocated for the current year, posting an increase of 13 per cent.

However, the revised subsidy was Rs 53.4 billion which was far more than the allocations for next fiscal year. KE would also get Rs 600 million as subsidy on agri-tubewells for Balochistan.

The government has also earmarked Rs 7 billion as subsidy to USC which is at par with the outgoing fiscal year. However, the government released only Rs 5 billion to the corporation.

For Ramazan package, an amount of Rs 2 billion has been earmarked for next fiscal year against Rs 3 billion allocated in 2015-16. An amount of Rs 5 billion has been earmarked to pay arrears to clear sugar arrears, which is Rs 1 billion more than the outgoing fiscal year. However, the government released Rs 2 billion for this purpose.

The government has also earmarked Rs 15.3 billion as subsidy to PASSCO for 2016-17 against Rs 11.3 billion allocated in 2015-16. However, the released amount stood at Rs 10 billion. Allocation for wheat stock reserve stocks will be Rs 7 billion against Rs 5 billion in 2015-16. The government also earmarked Rs 1.3 billion for freight subsidy on sugar exports by TDAP but the amount was not released due to NAB’s involvement.

No subsidy has been earmarked for National Food Security and Research Division and on fertiliser though the government had not allocated a single penny in 2015-16 for this purpose, later on released an amount of Rs 20 billion under these heads.

Allocations for other subsidies have been slashed to Rs 300 billion from Rs 1.303 billion estimated for the current fiscal year; Rs 300 million has been allocated as subsidy on wheat to FATA. No amount has been allocated for subsidy to refineries. In 2015-16’s budget, the government had allocated Rs 1 billion for refineries but did not release the amount. -Business Recorder