Budget 2020-21: Subsidy spending falls by 40% to Rs 209 billion

June 13, 2020 (MLN): The much-awaited budget FY2020-21 was announced yesterday, with Rs 209 billion enacted towards subsidy, marking a decrease of 40% and 24% from the revised estimates and actual budget figures of FY2019-20 respectively.

According to the budget document, the allocation for the subsidies to WAPDA/PEPCO is Rs 124 billion, which has the biggest share of the total allocation i.e. 59.33%. However, this is lower by Rs 77 billion from revised figures of FY2019-20. 

This is followed by the Naya Pakistan Housing Society with a share of 14.36%, KESC with 12.2%, and PASSCO with a share of 3.35%.

Under the head of WAPDA/PEPCO subsidy, an amount of Rs 110 billion has been earmarked to Inter-Disco tariff differential whereas Rs 3 billion have been allocated for Tariff differential for Agriculture tube-wells in Balochistan. The allocation subsidy for picking up WAPDA/PEPCO receivables from the merged districts of KPK has been cut to Rs10 billion from Rs 18 billion of the outgoing year while Rs1 billion allocated for WAPDA on account of tariff differential for AJK.

Interestingly, no subsidy has been allocated to the petroleum sector in this FY2020-21 budget when compared to Rs 23 billion subsidy given to PSO & APL and others.

The subsidy spending on KESC has been reduced to Rs 25.5 billion in FY2020-21, from Rs 59.5 billion of the outgoing FY2019-20.

Of the subsidy allocation for FY2020-21, Rs 3 billion has been earmarked to Utility Stores Corporation (USC). However, the subsidy provided to USC in FY2019- 20 climbed to Rs 43.5 billion owing to subsidy on sale of essentials, corona stimulus and Ramazan package to mitigate the impact of inflation on masses, especially marginalized segment, the poor.

As per the document, the subsidy allocation to PASSCO has been reduced to Rs 7 billion, which includes Rs 2 billion for wheat operation and Rs 5 billion for wheat reserved stock while subsidy spending to others increased to Rs 49.5 billion from Rs 7 billion.

Moreover, like FY2019-20, no subsidy has been given to National Food Security & Research Division in budget 2020-21.

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