KARACHI: The federal budget 2018-19 has proposed to allocate a sum of Rs175 billion under subsidies and grants. A total estimate of subsidies for budget 2018-19 is 0.5 percent of GDP.

In order to alleviate the impact of inflation on citizens, especially the poor segments of society, the Federal Government spends a fairly large sum on providing power and food subsidies.

In the budget estimates 2017-18 subsidies were Rs 138.846 billion; in revised estimates 2017-18 they increased to Rs 147.604 billion due to increase in subsidy electricity distribution companies including K-Electric and subsidy to fertilizer.

Total subsidies for fiscal year 2018-19 has been estimated at Rs 174.746 billion which has been increased by 25.9 percent and 18.4 percent over budget and revised estimates 2017-18.

In budget 2018-19, the allocation for subsidies to WAPDA/PEPCO forms the major component, which is 76.7 percent of the total allocation followed by subsidy to PASSCO with share of 10.9 percent and KESC with share of 8.8 percent.