ISLAMABAD: Prime Minister Imran Khan is to decide about policy options for continuation of subsidy on agriculture tube-wells in three provinces, official sources told Business Recorder.
Recently, Power Division informed the Economic Coordination Committee (ECC) that since the Provincial Governments do not agree to pay GST, the full amount would be passed onto the consumers in the respective Distribution Companies (Discos) from the August billing cycle and fixed charges will be part of the subsidy and would be paid by the Federal Government.
An amount of Rs9.248billion may be provided as supplementary grant during CFY2021-22. In case this is not possible, an amount of fixed charges may be passed on to the consumers in the August billing cycle. Power Division further proposed that arrears of Rs16.658 billion in terms of fixed charges may be released as supplementary grant in 2021-22 and the past arrears of GST may be recovered from the consumers since the provincial governments have declined to make the payment.
During the ensuing discussion, the Chairman ECC observed that agriculture is a provincial subject and for the purpose provinces were being provided substantial amount from divisible pool under NFC Award. Therefore, all provinces should take up the financial impact of the subsidy as per their provincial needs.
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When the ECC decision was presented before the Cabinet on August 24, 2021, Minister for Finance stated that the ECC had deferred the case titled ‘non-payment of GST and fixed charges by agriculture tube-well consumers in Punjab, Sindh and KPK’.
He also sought guidance of the Cabinet as according to him the decision would have political overtones. He explained that although the subsidy on tube-wells was desirable to maintain the momentum in the agriculture sector but its misuse and the failure by the provinces to share the burden had made it unsustainable for the federal government.
Agriculture being a devolved subject, it was for the provinces to take the financial impact of the subsidy, especially when they were being provided substantial resources under the NFC Award. It was suggested that the way forward rested in solarization of tube-wells, which could be incentivized through funding support. The Prime Minister agreed to chair a separate meeting on the issue to discuss policy options in detail.
Copyright Business Recorder, 2021