The federal government has allocated Rs 166.448 billion for subsidies in the budget 2011-12, against Rs 126.684 billion earmarked for 2010-11 but later on revised massively upward to Rs 395.801 billion. In the budget estimates for 2010-11, subsidies were 1.5 per cent of GDP but in the revised estimates subsidies rose to 2.19 per cent; in budget 2011-12. Subsidies are targeted to be reduced to 0.79 per cent of GDP.
According to the budget documents, Rs 122.7 billion have been earmarked for subsidy to power sector against Rs 84 billion allocated in the 2010-11 budget, which was raised to Rs 295.827 billion by the end of the year. The government has earmarked Rs 10 billion for adjustment of additional surcharge against GST as compared to actual allocation of Rs 4 billion in 2010-11, revised to Rs 7 billion.
Allocations for the inter-Disco tariff differential have been earmarked at Rs 50 billion in 2011-12 against Rs 30 billion for the outgoing fiscal year. However, the allocation for this purpose was revised upward to Rs 238.8 billion. The government has allocated Rs 7 billion to pick up receivables from Fata as compared to Rs 10 billion earmarked in 2010-11. To pick up interest payment on TFCs Rs 55.7 billion have been allocated against Rs 40 billion earmarked for 2010-11.
For subsidy to Karachi Electric Supply Company (KESC), Rs 24.588 billion have been earmarked against Rs 3.317 billion allocated for 2010-11 that was revised upward to Rs 47.317 billion. Of this Rs 350 million were earmarked for adjustment of additional surcharge against GST, Rs 24 billion to pick up tariff differential and Rs 238 million payable to PSO and PKGCL.
The government has also allocated Rs 4 billion subsidy to TCP for import of sugar against Rs 17.130 billion in the revised estimates of 2010-11. However, no amount has been allocated for import/export of wheat and cotton operations.
Budget documents further reveal that subsidy to the Utility Stores Corporation (USC) has been slashed to Rs 2 billion against Rs 4.2 billion allocated for 2010-11. Details show that allocation for the Ramazan package has been increased to Rs 2 billion against Rs 700 million earmarked in 2010-11. However, no amount has been earmarked for sale of sugar as USC, which implies that sugar prices will be increased further at USC outlets.
Subsidy to Passco has been massively reduced to Rs 74 million against Rs 2.9 billion earmarked in 2010-11. Similarly, Rs 74 million have been earmarked for Mung operation as compared to Rs 300 million in 2010-11. However, no amount has been allocated as subsidy for sale of wheat and paddy by Passco.
The amount of subsidy for Fauji Fertiliser Bin Qasim Limited has been slashed to Rs 162 million from Rs 185 million allocated in 2010-11; oil refineries will get Rs 7.921 billion in 2011-12 against Rs 10.807 billion in 2010-11 showing a massive decrease. No amount has been allocated for servicing of outstanding foreign loans liability of Soprest/GIK Instituted Topi. In 2010-11, the government had allocated Rs 200 million for this purpose but the amount was slashed to Rs 38 million by the end of the year.
Allocation for wheat reserved stock will be Rs 4 billion against Rs 3 billion earmarked in 2010-11 which was later revised to Rs 4 billion. However, no amount has been allocated as subsidy as R&D support to textile sector, manufacturers of phosphatic pottasic fertiliser, import of phosphatic pottasic fertiliser and to TCP for import of urea. In 2010-11 budget the government had also not allocated a single penny but by the end of the year allocated Rs 12.5 billion under these four classifications. It is not clear if next year, the government will follow its precedence of disregarding its own budgetary allocations.
Allocation for sale of wheat to Fata is Rs 255 million against Rs 233 million in 2010-11, sale of wheat in Gilgit Baltistan has been earmarked at Rs 744 million and Rs 4 million as subsidy on sale of salt in Gilgit.