The murky world of federal subsidies

Federal subsidies in Pakistan, particularly those directed towards the power sector, have raised significant concerns regarding transparency, effectiveness, and their impact on poverty alleviation.

For the fiscal year 2023-24, the initial budget allocated PKR 894 billion for electricity subsidies. However, revised estimates revealed a substantial reduction to PKR 584 billion, marking a 35% decline. Despite this reduction, overall subsidy spending exceeded the initial allocation by PKR 7 billion.

An allocation of PKR 310 billion, initially earmarked under the “Pakistan Energy Revolving Fund (PERA) + Government-Owned Power Plants (GPPS) + Additional” budget estimates for 2023-24, is conspicuously absent in the revised estimates, contributing to the decline.