ISLAMABAD: The federal cabinet has been informed that over Rs2 trillion or 4.5 percent of the GDP regular subsides on budget and grants were being provided to different sectors of the economy with an equal amount potential losses on account of circular debt, guarantees as well as non-productive loans. Sources said that Special Assistant to the Prime Minister on Revenue and head of "subsides cell" Dr Waqar Masood gave a detailed briefing to the federal cabinet meeting presided over by Prime Minister Imran Khan on Tuesday on total volume of subsides as well as potential losses and borrowing.
The meeting also ratified the ECC decision of fixing Rs1,650 as minimum wheat support price for the upcoming crop 2020-2021. They added the special assistant informed the meeting that at present total volume of regular subsidies and grants was 4.5 percent of the GDP or over Rs2 trillion.
Additionally, potential loss on account of circular debt as well as guarantees and non-productive loans was also of similar amount. Dr Waqar Masood also proposed to the federal cabinet meeting that to start from the power sector and focus should be to limit the subsidies within the budgeted target and deal with the circular debt and capacity payment before moving on to review the grants and submit recommendation to the federal cabinet meeting to do away with "unproductive" grants.
The meeting was informed that at present the total volume of subsides is around 4.5 percent of the GDP and presented proposals for provided targeted subsides. The special assistant suggested that "Ehsaas" database should be used to provide subsidies to the poor and the deserving people.
The meeting was also presented a comparative analysis of subsides and grants provided during the last 13 years and was told that that most of the sectors of the economy, including energy, agriculture, were being provided subsidies and consequently there was unnecessary burden on the exchequer.
On average, expenditure remained higher compared to revenue collection because of debt servicing and repayment of loans, the meeting was further informed. The prime minister was of the view that the poor deserve the subsidies, whereas at present, rich and the poor are equally benefiting from subsides, and wanted to put in place a mechanism that must ensure that subsidies reach the poor.
The premier termed the transfer of public-sector entities' funds from the commercial bank to the State Bank of Pakistan (SBP) in single treasury account a major success of the government. The prime minister directed that a comprehensive programme with timelines should be submitted to the committee for providing subsidies to the poor.
The federal cabinet also approved Rs1,650 per 40kg as minimum wheat support price for 2020-2021 crop, and approved the ECC meeting's decision of October 28 and Cabinet Committee on Energy's decision dated October 29; it also approved establishment of digital cooperation organisation proposed by the Saudi government that would help promote information technology among the regional countries.
Minister for Planning, Development and Reforms briefed the cabinet meeting about the current wave of coronavirus in the country and stated the prevalent incidence of the pandemic in the country was "very dangerous".
The prime minister directed that all the precautionary measures must be taken and directed the NCOC to devise a strategy to deal with the challenge without affecting the employment opportunities. The government decided that it would not hold any public gathering in view of the second wave of the coronavirus in the country.
Later, addressing a press conference, Minister for Information Shibli Faraz said that former prime minister Nawaz Sharif must submit himself before the law of the land. He said that by living abroad one cannot become a revolutionary.
On wheat support price, he said that Sindh did not release wheat and on top of that the province announced MSP which is the prerogative of the federal government. He said that Sindh government's role in flour and sugar was very "disappointing," which facilitated hoarding.
He said the government wanted to announce a support price that benefits farmers and people of the country alike, and a meeting to this effect is being held among adviser on finance, ministers for food and the EAD.
He said that import of vegetable from Indian has been stopped, adding that weather as well as disruption in supply chain also led to demand supply gap and increase in the prices of vegetables. The minister said a letter has already been written to the Privatization Commission for removal of the PTV from the privatization list.
APP adds: Faraz said that the cabinet thoroughly discussed the issue of wheat support price and input of cabinet members most of whom were public representatives was taken. He said that issue was being debated for quite some time and it was also taken up in the Economic Coordination Committee (ECC) in its previous meeting.
The minister said that Punjab is the major producer of wheat whereas Sindh has 13 to 16 per cent share in wheat produce. He said the Sindh government was responsible for the crisis as it failed to release any wheat for consumers. He said its shortage in Sindh not only resulted in high prices in the province but also caused transfer of the commodity from Punjab to Sindh which affected the supply chain and also raised its price in Punjab and KPK.
He said that Prime Minister Imran Khan had the desire that prices of all edibles should not increase so that the commodity is available for the low income segments at affordable rates. He said presently international prices of the wheat are on the higher side but the support announced by the Sindh was even higher than the international price.
The minister said that unfortunately during the past four to five decades the country had been run on ad hoc basis and no long-term policies were made for the country. He said the system of subsidies given by the government was faulty as both billionaires and the poor benefit from them equally.
While replying to questions of media persons, Senator Shibli Faraz appreciated the self-discipline and accountability mechanism of the armed forces in relation to the Karachi incident. He said that military side has done its job and now the Sindh government should set an example with regards to how the police officers resorted to a sort of mutiny and fix the responsibility how it all happened.
It should also check why an FIR was not registered initially by the concerned SHO, which led to a resentment and reaction from public and pressure came on the Rangers and they approached high official of police to sort this issue out.
The minister was of the opinion that the Sindh government should ensure that discipline is maintained by all and the IG also must conduct an inquiry regarding his officers.
To a question about a resolution in the Punjab Assembly on fixing wheat support price at Rs. 2000 per 40 kg, the minister said that the provinces could express their desire but it was the job of the federal government to determine the support price keeping in mind interests of both people and wheat growers.
The minister expressed the hope that the new wheat support price and Rs. 100 subsidy to the farmers would be beneficial to both the masses as well as the farmers.
Copyright Business Recorder, 2020
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