Pakistan is moving ahead with a wide ranging subsidy reform that will link future electricity and gas subsidies with the Benazir Income Support Programme to improve targeting, reduce inefficiencies, and help address circular debt, according to the World Bank.
In its latest report titled South Asia Development Matters, From Risk to Resilience, the World Bank said Pakistan’s subsidy reform is expected to realign social protection spending and change its composition as a share of GDP by directing support to households that need it most.
The Bank noted that fossil fuel subsidies in South Asia remain distortionary, amounting to around 1 percent of GDP in India and even more in countries such as Pakistan, Bangladesh, and Maldives. It said these resources could be redirected towards social protection programmes that strengthen the ability of vulnerable populations to cope with economic and climate shocks.
According to the report, Pakistan is implementing a comprehensive subsidy reform aimed at reducing inefficiencies in the power sector and tackling the long standing problem of circular debt. Under the proposed approach, any future electricity and gas subsidies will be aligned with the Benazir Income Support Programme, the country’s flagship social safety net.
The World Bank described BISP as a programme that reduces poverty and improves human capital outcomes by using proxy means testing to identify poor households and combining cash transfers with health and education focused behavioural interventions. It said BISP has improved programme design and invested in digital delivery systems to increase accessibility and responsiveness.
The report highlighted that dynamic inclusion mechanisms in social protection systems remain rare in South Asia. However, Pakistan and Maldives were identified as exceptions, with Pakistan having developed a well established social registry and offering self registration options for beneficiaries.
The Bank cited Pakistan’s BISP emergency cash programme during the Covid 19 pandemic as a regional first. The programme used a fully automated, data driven approach to provide one time financial assistance to around 12 million vulnerable or newly poor families.
The report said stronger funding arrangements and improved information systems would further enhance the effectiveness of social protection systems across South Asia by improving targeting and enabling rapid scale up during crises.
Beyond subsidies and social protection, the World Bank warned that groundwater levels are receding in lowland and plains areas of Pakistan and India, exposing farmers to increasingly frequent droughts. It said inefficient irrigation practices and weak water management remain major risks to agricultural productivity.
Pakistan was described as one of the most water stressed countries in the world, with agriculture consuming more than 90 percent of available freshwater resources. In Punjab, inefficient irrigation, excessive groundwater extraction, and outdated farming techniques have contributed to declining water availability and lower farm productivity.
The report pointed to the World Bank financed Punjab Irrigated Agriculture Productivity Improvement Project as an example of effective intervention. The project improved water channels, introduced high efficiency irrigation systems, constructed water harvesting ponds, and promoted land leveling services.
According to the World Bank, these measures reduced irrigation water losses, improved resilience by storing rainwater, and increased irrigation efficiency. The project delivered water savings of 57 percent, raised cereal yields by 14 to 31 percent, and improved total water efficiency of production by 9 to 45 percent.
This is a significant reform move — linking power subsidies with BISP eligibility can make support programs more efficient and ensure benefits reach deserving households.
For users who also need a trusted way to check their CNIC status or BISP payment situation online, the BISP & CNIC eligibility check portal is a helpful resource to securely verify details, especially for users in Pakistan.