Dilemma of subsidies


ACCORDING to media reports, Pakistan will have to share with the IMF a tangible plan for mobilization of tax revenues, hiking the power tariff and eliminating circular debt besides proposing amendments to the State Bank of Pakistan (SBP) and NEPRA Acts in order to put the stalled programme back on the track. The government would also introduce a new mechanism for provision of power sector subsidies where the Ehsaas Programme data would be used to identify the beneficiaries. The power subsidy obtained through tube-wells will be abandoned.
The report is a clear manifestation that people will have to be ready for more mini-budgets during the year due to measures for mobilization of tax revenues and an increase in power tariff. All over the world, subsidies are offered to provide relief to different sectors and segments of the society during difficult times. Subsidies to various sectors are given to reduce the cost of production and make products competitive in the international market, which results in increase in exports whereas subsidies to vulnerable segments of the society are aimed at providing them relief against inflationary trends. In this backdrop, it is regrettable that most of the subsidies for the common man have been eliminated at the instance of foreign donors, which have their own agenda and viewpoint. Cost of power subsidy has been reduced by sixty per cent in the new budget which obviously mean an increase in the electricity tariff that is already on the higher side in Pakistan. The Government claims there was no justification for across- the-board subsidy for all categories of consumers but it ignores the reality that slab system itself is exploitation as those consuming more are penalized with higher tariff, which is totally unjustified as there should be single rate without consideration of consumption. The proposal to use BISP data for power needs to be reviewed as this data is highly flawed and countless people have been left out for various reasons.

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