Subsidies worth Rs1.4 trillion given in four years
Biggest chunk of Rs1.12 trillion swallowed by power sector.
ISLAMABAD:
The Pakistan Peoples Party-led coalition government has given Rs1.4 trillion in subsidies on power, fertiliser and food in its four-year rule and most of these have been received by all and sundry in the absence of a set mechanism, according to a briefing given to the federal cabinet.
In a meeting on Wednesday, the economic team stunned the cabinet when it told Prime Minister Yousaf Raza Gilani and his team that the government had spent almost Rs2 trillion on subsidies, implementing PM’s discretionary orders and keeping afloat Pakistan Railways and Pakistan International Airlines.
An official of the finance ministry said the biggest chunk, Rs1.12 trillion, was spent on power subsidies, which were largely consumed by middle, upper middle and elite classes.
In the first year of its rule, the government gave Rs120 billion in power subsidies, in second year Rs180 billion, in third year Rs335 billion and in fourth year Rs487 billion. This indicates that with the passage of time the electricity crisis has aggravated with the government failing to resolve the issue.
Only in implementing schemes initiated on the directives of the prime minister, Rs130 billion was utilised in four years. The premier spent Rs110 billion in discretionary funds under the Peoples Work Programme-II and another Rs20 billion under PWP-I.
To the utter surprise of Railways Minister Ghulam Ahmad Bilour, the economic team disclosed that Rs119 billion was given in four years to keep the aging railways on track. The railways’ tale is not different from power companies as with every passing year the state-owned corporation’s losses have increased.
On fertiliser subsidy, the government spent Rs110 billion in four years. Some cabinet members again sought relief for the agricultural sector in next year’s budget. Similarly, Rs137 billion was given in food subsidies.
Under the Benazir Income Support Programme, the government spent Rs138 billion in four years. It also distributed 12% shares of 80 public sector enterprises among 1.2 million employees.
Despite these heavy expenses, government studies show that the gap between rich and poor has widened further and poverty has increased significantly.
Financial autonomy
While giving more financial autonomy to provinces, the central government transferred an additional Rs800 billion to the provinces in the first two years of implementation of the National Finance Order, the finance ministry said in its briefing to the cabinet.
Additionally, it gave Rs71 billion to Azad Jammu and Kashmir in four years while Rs120 billion was released to Federally Administered Tribal Areas and Rs52 billion to Gilgit-Baltistan.
However, this significantly squeezed the central government’s fiscal space, leaving it with only 30% of federal revenues. The central government meets most of its expenses by borrowing from domestic and international sources, the premier was told.
In the National Finance Commission award, the central government also took a hit of Rs120 billion on account of arrears of gas development surcharge to keep Balochistan on board. Besides, it also took a Rs110 billion liability of Wapda on its books in a bid to appease the Khyber-Pakhtunkhwa government.
In the four years, the Centre and provinces spent Rs2.2 trillion on development projects and completed 657 schemes.
Published in The Express Tribune, April 13th, 2012.
The Pakistan Peoples Party-led coalition government has given Rs1.4 trillion in subsidies on power, fertiliser and food in its four-year rule and most of these have been received by all and sundry in the absence of a set mechanism, according to a briefing given to the federal cabinet.
In a meeting on Wednesday, the economic team stunned the cabinet when it told Prime Minister Yousaf Raza Gilani and his team that the government had spent almost Rs2 trillion on subsidies, implementing PM’s discretionary orders and keeping afloat Pakistan Railways and Pakistan International Airlines.
An official of the finance ministry said the biggest chunk, Rs1.12 trillion, was spent on power subsidies, which were largely consumed by middle, upper middle and elite classes.
In the first year of its rule, the government gave Rs120 billion in power subsidies, in second year Rs180 billion, in third year Rs335 billion and in fourth year Rs487 billion. This indicates that with the passage of time the electricity crisis has aggravated with the government failing to resolve the issue.
Only in implementing schemes initiated on the directives of the prime minister, Rs130 billion was utilised in four years. The premier spent Rs110 billion in discretionary funds under the Peoples Work Programme-II and another Rs20 billion under PWP-I.
To the utter surprise of Railways Minister Ghulam Ahmad Bilour, the economic team disclosed that Rs119 billion was given in four years to keep the aging railways on track. The railways’ tale is not different from power companies as with every passing year the state-owned corporation’s losses have increased.
On fertiliser subsidy, the government spent Rs110 billion in four years. Some cabinet members again sought relief for the agricultural sector in next year’s budget. Similarly, Rs137 billion was given in food subsidies.
Under the Benazir Income Support Programme, the government spent Rs138 billion in four years. It also distributed 12% shares of 80 public sector enterprises among 1.2 million employees.
Despite these heavy expenses, government studies show that the gap between rich and poor has widened further and poverty has increased significantly.
Financial autonomy
While giving more financial autonomy to provinces, the central government transferred an additional Rs800 billion to the provinces in the first two years of implementation of the National Finance Order, the finance ministry said in its briefing to the cabinet.
Additionally, it gave Rs71 billion to Azad Jammu and Kashmir in four years while Rs120 billion was released to Federally Administered Tribal Areas and Rs52 billion to Gilgit-Baltistan.
However, this significantly squeezed the central government’s fiscal space, leaving it with only 30% of federal revenues. The central government meets most of its expenses by borrowing from domestic and international sources, the premier was told.
In the National Finance Commission award, the central government also took a hit of Rs120 billion on account of arrears of gas development surcharge to keep Balochistan on board. Besides, it also took a Rs110 billion liability of Wapda on its books in a bid to appease the Khyber-Pakhtunkhwa government.
In the four years, the Centre and provinces spent Rs2.2 trillion on development projects and completed 657 schemes.
Published in The Express Tribune, April 13th, 2012.