Lahore - With another crisis brewing after petrol shortage in Punjab, the prices of wheat flour can take an upward leap after bank loans taken up on wheat have reached Rs73 billion.
According to Food Department, if the department is not given Rs15 billion allocated in the budget as subsidy, it will have to increase the flour prices. In the new buying season, bank will give loans on bigger markup, however, if the amount is provided to the department, it can buy wheat on loans with less markup.
Sources in Punjab Food Department said that Rs 15 billion were allocated as subsidy for wheat in the budget for current financial year. But, the department was given only Rs 4.77 billion till December 2014. They further said if the amount for subsidy was not provided to the department within a month, the prices of flour will have to be increased despite having stock of 3.6 million metric tonnes in the province.
As per details, Punjab food secretary has submitted a detailed report to the chief minister stating that every year the department buys wheat from cultivators on the support price fixed by the federal government and for that purpose the department secures loans from commercial banks on markup for the purchase of wheat. This purchased wheat is then stored in godowns and provided to flour mills on subsidised rates as per government’s directions. The federal government this year had fixed the wheat support price at Rs1300 per 40 kg. The Food Department had taken Rs 114 billion loan from the banks to purchase 3.5 million metric tonnes wheat.
For the last few years, the department is not being given the complete amount of subsidy earmarked in the budget due to which the outstanding amount of subsidy for wheat has risen to Rs 91.80 billion.
The Food Department has requested the government to release the amount for subsidy (Rs 15billion) enabling it to secure loans from commercial banks on less markup otherwise the loans taken from banks on bigger markup will make the wheat flour dearer.
Sources said that Punjab Finance Department has recently released Rs 2.5 billion for Rozgar Scheme and more amounts will be released as per directions issued by the chief minister and priorities set by the government. The chief minister has been told clearly by the department that raise in wheat flour prices will add to the woes of people already reeling under the petrol prices. However, it is up to chief minister to take a decision in this regard, the sources added.
When contacted, the Food Department refused to express its viewpoint in this connection.