ISLAMABAD - The federal government has slashed the subsidies amount by 40 percent for the next fiscal year due to the financial constraints amid Covid-19 pandemic.

The government has allocated Rs209 billion as subsidies for FY2020-21 against the revised estimates of Rs349.5 billion of the outgoing financial year, showing a decline of 40.11 percent. According to the budget documents, the government has allocated Rs124 billion as subsidy for the power sector for the next fiscal year, which was Rs201 billion during the outgoing year. The breakup of Rs124 billion showed the government earmarked Rs110 billion for inter-DISCO tariff differentials as compared to Rs162 billion for the outgoing year. The government allocated Rs3 billion as subsidy for tariff differentials for agriculture tube-wells in Balochistan.

Meanwhile, Rs10 billion has allocated to clear Wapda/PEPCO receivables from merged districts of KP and Rs1 billion subsidy to Wapda on account of tariff differential for AJ&K. Meanwhile, an amount of Rs25.5 billion has been earmarked for KESC for FY2020-21 as compared to Rs59.5 billion for outgoing year 2019-20.The government has also reduced the subsidy given at the Utility Stores Corporation from revised Rs43.5 billion to Rs3 billion for the next year. The government had initially allocated only Rs5.5 billion for USC. However, later, the government had upward revised the USC subsidy amount to Rs43.5 billion. The government has not kept any amount for the Ramazan package for the payment of sugar arrears.

The government has also decreased the subsidy amount for PASSCO to Rs7 billion from Rs15.5 billion for the upcoming financial year.