The government’s proposal to massively reduce subsidies during the financial year 2011-12 to 0.79 percent of the GDP or 166.4 billion, as compared to the revised estimate of Rs395.8 billion, would primarily hit the common man. The subsidies, as per budget 2010-11, were 1.5 percent of the GDP which later soared up to 2.19 percent in the revised estimates when amounts of the subsidies, estimated Rs126.6 billion, were increased in the revised estimates to 395.8 billion.
Now, the total amount of subsidies has been slashed by 294.9 billion in the budget 2011-12, as it had been committed with IMF that total amount of the subsidies would not exceed this figure. Hence, the consumers would not be provided any financial assistance. According to details of the budget 2011-12, the subsidy of Rs84 billion in the budget 2010-11 to WAPDA and PEPCO, which later went up in the revised estimates to Rs295.8 billion would be cut down to Rs122.7 billion.
The government would incur Rs10 billion in subsidies as an adjustment of the additional surcharge against general sales tax, Rs50 billion as inter-Disco Tariff Differential, Rs 7billion would be picked up as receivables from FATA and Rs55.7 billion would be picked up as interest for TFCs. Moreover, subsidy to KESC, which was originally Rs3.3 billion but later shot up to Rs47.3 billion in the revised estimates, has been fixed at Rs 24.5 billion for the year 2011-12.
The amount of Rs350 million would be incurred by the government as an adjustment of additional surcharge against GST, Rs24 billion would be picked up as a tariff differential and Rs238 million would be payable to PSO and PKGCL as fuel prices. Similarly, the government has proposed cutting down the subsidies for edibles. The subsidy to Trading Corporation of Pakistan (TCP), which increased from Rs3.3 billion to Rs47.3 billion in the revised estimates, would be no more than Rs4 billion in the year of 2011-12 and even that would only be given for imported sugar.
The case for the subsidy to Utility Stores Corporation (USC) also follows a similar trend as it has been reduced from Rs4.2 billion to Rs2 billion in the year 2011-12. The subsidy of the said amount would be given only in the form of Ramdhan Package as there is no other subsidy available to the USC. The most drastic cut in subsidies has been for PASSCO, whose amount stood at Rs2.9 billion in the year of 2010-11 and has now been slashed to Rs74 million. The subsidy of Rs2.6 billion given to PASSCO in the sale of wheat and paddy operation in the year of 2010-11 would now completely be abolished. A subsidy of Rs74 million in 2011-12 would be given only for the pulse Mung.
The budget 2011-12 has also decreased subsidies to other sectors, such as to fertiliser manufacturers, oil refineries, services of outstanding foreign loans and the textile sector. The subsidies for those sectors in 2011-12 would be Rs13 billion. The total subsides to those sectors in the budget of 2010-11 amounted up to Rs15 billion, which shot up to Rs28.4 billion in the revised estimates. The Fuji Fertilizers Bin Qasim Limited would be provided a subsidy of Rs162 million, which was Rs185 million in the year 2010-11 and oil refineries have been allocated a subsidy of Rs7.9 billion, which was Rs10.8 billion in the last year.
The wheat reserved stock would be given Rs4 billion and sales of wheat in FATA and Gilgit-Baltistan Rs999 million in subsidies, respectively.
