Financial Mismanagement And Deficits
Over PKR 70 Billion was given to the fertilizer industry with little to no effect on prices.
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Pakistan’s economy has been struggling with fiscal deficits for as long as one can remember. But some might argue that the cause for these deficits isn’t a cash-strapped government, but instead a mismanaged one. A few of the many cases of inefficient subsidization can further support this argument.
The rising fuel cost and lack of transportation facilities have caused a paralysis-like situation for all. For instance, petrol prices have risen by 55% in the past 11 months, with no respite in near future. However, the fare at the Islamabad-Rawalpindi Metro bus service project has remained at PKR 20-30 for all distances. In contrast, the rest of the cost is shared by the Government in the form of a PKR 2 Billion subsidy. The viability and sustainability of the project become questionable considering that the bus route is only limited to central areas. Moreover, the project is underutilized. Estimates suggest a capacity of 150,000 per day, however, the number has stayed under 130,000.
Another similar waste of resources, in the garb of subsidies, is Pakistan’s support of the fertilizer industry. Pakistan has released PKR 70 Billion in subsidies to fertilizer firms in the form of discounted LNG over the past few years. The intended consequence of the support is facilitating small-scale farmers by providing cheap fertilizers. However, the oligopoly of the industry has repeatedly pocketed the funds received from the government, leaving no relief for the farmers.
Subsidies can support the most underprivileged in the economy, and boost economic growth in an indirect way. However, using subsidies as a political tool is a tactic well-known in Pakistan’s history.
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