Prime Minister Imran Khan has announced a historic relief package worth Rs. 120 billion under which essential commodities will be subsidized for 53% of the country’s population.
Addressing the nation on Wednesday, the premier warned the public to gear up for more price hikes for petroleum products, otherwise, the country’s fiscal deficit would spiral out of control.
Under the Rs. 120 billion relief package, 130 million of the country’s population will receive a 30% subsidy on per-unit purchase of three essential commodities—oil/ghee, flour, and pulses— for the next six months.
Ehsaas Rashan Program
According to details, the subsidy will be provided under the recently launched Ehsaas Rashan Program under the larger Ehsaas Program.
Ehsaas Rashan has been designed as a precision-target subsidy program to provide financial assistance to deserving beneficiaries on the purchase of essential commodities at a discount through digitally processed transactions.
The flagship Ehsaas Program recently collected data on the financial statuses of families across the country. Ehsaas Rashan has identified 20 million households across Pakistan with a poverty score of less than 39 and an income of Rs. 31,500 per month that deserve subsidy on essential food items.
Each of the 20 million families—overall 130 million people— will be provided a targeted subsidy of up to Rs. 1,000 per month on the per-unit purchase of oil/ghee, flour, and pulses.
How The Subsidy Program Works
The subsidy will be provided at designated grocery shops that would sign up with a digital targeted subsidy disbursal system developed by the Ehsaas Program in collaboration with the National Bank of Pakistan (NBP).
All registered grocery shops will also be required to open bank accounts and the targeted subsidy will be disbursed through RAAST, an instant payment system developed by the State Bank of Pakistan (SBP).
The digital subsidy disbursal system will help to track the utilization of the subsidy under Ehsaas Rashan by each deserving family at the product and geographical levels.
The registration portal for the Ehsaas Rashan program will open next week. The registered grocery shops and beneficiaries would undergo a robust vetting procedure to prevent the misuse of the subsidy program.
Note that the Rs. 120 billion subsidy under the Ehsaas Rashan program will be extended under a federal-provincial cost-sharing arrangement. So far, Punjab, KP, GB, and AJK governments have committed to the program while talks are underway to get Sindh and Balochistan governments on board as well.
The total budget of the Ehsaas Rashan program for the next six months is Rs. 120 billion in FY 2021-22 while the federal government and all participating provinces will share its fiscal resources in the ratio of 35:65.
