Govt Ends Utility Stores Subsidy, Overall Subsidies Cut by Rs. 190 Billion

The federal government has completely withdrawn subsidies for Utility Stores and the Ramazan Relief Package in the budget for fiscal year 2025–26, marking a significant policy shift as it slashes total subsidies by Rs. 190 billion compared to the current year. According to official documents, the total allocation for subsidies in the upcoming fiscal year stands at Rs. 1,186 billion, down from Rs. 1,376 billion in FY 2024–25. The post-budget figures reveal that the government has removed several key consumer-focused subsidies, including the complete elimination of support for Utility Stores and agricultural tube wells. No funds have been allocated for the Prime Minister’s Ramazan Relief Package, and Utility Stores will also not receive any financial support under other schemes. For agriculture, all subsidies on fertilizer supplies have been ended, although Rs. 7 billion has been allocated for urea imports. Similarly, agricultural solar tube wells in Balochistan and mark-up subsidies on Zarai Taraqiati Bank loans have also been scrapped. In contrast, the power sector remains the largest recipient of subsidies, with Rs. 1,036 billion earmarked for the next fiscal year. However, even in this sector, there is a significant cut of Rs. 154 billion. K-Electric will receive Rs. 125 billion as a tariff differential subsidy, but the overall subsidy pool for industries has been sharply reduced to Rs. 24 billion, compared to Rs. 68 billion in the current year. The food security sector has been allocated Rs. 20 billion each for wheat supply in Gilgit-Baltistan and operations by PASSCO. Other notable allocations include Rs. 9 billion in subsidies for the Electric Vehicle (EV) scheme and Rs. 7.3 billion for the Islamabad Metro Bus Service. The housing sector has been allocated Rs. 10 billion, while the State Bank of Pakistan’s refinancing scheme is proposed to receive Rs. 30 billion. For the petroleum sector, a modest Rs. 1.2 billion has been earmarked, and the SME sector is set to receive Rs. 5.4 billion in subsidies.