Budget 2023-24: Over Rs1tr in subsidies, but still less than last year
ISLAMABAD: Amid reports of ‘pressure’ from the International Monetary Fund (IMF), the government has earmarked Rs1.074 trillion in subsidies in its budget for fiscal 2023-24, about 2.6 per cent lower compared to last year’s allocation.
According to the budget document, significant cuts have been made to subsidies for three different sectors — power, petroleum, and additional flood relief arrangements.
The highlights from the new budget are as follows:
Petroleum and gas: Subsidies for the petroleum sector have been slashed by 47.4pc to Rs53.6bn for fiscal 2023-24. No subsidy has been proposed on LNG for industry for this year. Similarly, no subsidy has been provisioned to cover exchange losses incurred by PSO on foreign loans and Price Differential Claims under the PM package. Of the total allocation of Rs53.6bn, a sum of Rs12.6bn has been earmarked for PSO and APL, and Rs30bn for domestic consumers on the SNGPL network.
Power sector: Subsidies for the power sector have been slashed 14.5pc, with Rs579bn earmarked for fiscal 2023-24. Under this head, Rs150bn have been proposed for inter-Disco tariff differentials. The government has earmarked Rs310bn in the budget for IPPs against Rs180bn in FY23. Significantly, no specific amount has been set aside for FCA spillovers, the Kissan package, flood water management, industrial support package, and zero-rated industrial subsidy.
AJ&K: The government has allocated Rs55bn for the AJ&K TDS for the year.
K-Electric: For the next fiscal, Rs315bn have been set aside to subsidise K-Electric. This will be an increase of 38pc compared to last year’s Rs193bn for this head. A sum of Rs127bn has been allocated for tariff differential subsidies, Rs10bn for tariff differential for agriculture tube wells in Balochistan, and Rs7bn for the Industrial Support Package.
Passco: Passco will get Rs10bn to subsidise wheat operations and wheat reserve stocks.
Utility Stores: With a 14 per cent increase, the government has allocated Rs35bn for the USC in fiscal 2023-24. Out of this amount, Rs5bn will be spent on the Ramazan package, while Rs30bn will be allocated for the Prime Minister’s package.
Other subsidies: The government has also proposed some other subsidies in the budget, notably: Rs10.5bn earmarked for wheat subsidy in Gilgit-Baltistan, Rs2bn for the Metro Bus project, Rs12.2bn for the Mera Pakistan Mera Ghar Housing Scheme, Rs30bn for fertiliser plants, and Rs6bn to subsidise urea imports.
Published in Dawn, June 10th, 2023