ISLAMABAD: The government has withdrawn subsidy to agriculture and five zero-rated sectors from March 1, 2023 as a pre-condition of the International Monetary Fund (IMF) program, which will save Rs 65 billion.

Of Rs 65 billion, Rs 53 billion subsidy will be withdrawn from five zero rated sectors whereas impact of agriculture sector is around Rs 12 billion from March to June 2023.

The government was providing relief to the electricity consumers in the form of different subsidy schemes (TDS, ISP, ZRI, FATA, AJK, etc.)

The sources said assuming the allocation of Rs 355 billion for FY -23, the base case assumptions have been revised accordingly, adding that Zero-Rated Industry (RZI) and Kissan subsidy packages have been discontinued from March 1, 2023.

The consumer base rate which was Rs 15.28 per unit in June- 22 increased to Rs 23.39 per unit June-23. Power Division has issued both notifications with effective from March 1, 2023.

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The government had approved tariff of Rs 19.99 per unit all-inclusive for five export-oriented sectors but the IMF took serious note of the decision and made it clear that it would allow subsidy to any influential groups.

With withdrawal of subsidy, tariff for five zero-rated sectors will be Cents 9 per unit whereas agriculture sector will have to pay Rs 16.60 per unit.

Copyright Business Recorder, 2023