Government Approves Rs60 Billion Relief Package for Essential Goods

The Economic Coordination Committee (ECC) of the Cabinet, chaired by Finance Minister Muhammad Aurangzeb, approved a substantial Rs60 billion relief package on Thursday to provide subsidized essential goods to poorer households. This move represents a 71% increase from the previous year’s allocation, driven by a significant rise in the prices of basic commodities.

Key Features of the Relief Package

The relief package aims to assist lower-income families by subsidizing five essential goods—wheat flour, rice, sugar, ghee, and pulses—through the Utility Stores Corporation. Of the Rs60 billion allocation, Rs10 billion will be specifically designated for the Ramazan Relief Package, and Rs1 billion will go to the Federal Board of Revenue (FBR) to cover the tax on the subsidy.

Increased Subsidies Per Household

Compared to the previous fiscal year, the average targeted subsidy per household has increased by 25%, rising from Rs2,734 to Rs3,650. Households identified through the Benazir Income Support Programme will receive:

• Wheat Flour: Rs1,700 subsidy per 20kg bag.
• Sugar: Rs50 per kg subsidy.
• Ghee: Rs100 per kg subsidy.
• Pulses: Rs50 per kg subsidy.
• Rice: Rs100 per kg subsidy for low-quality rice.

This initiative is part of the government’s efforts to combat inflation, which remained over 23% on average during the last fiscal year.

Industry Status Granted to Warehousing and Logistics Sector

In a significant policy shift, the ECC also approved industry status for the warehousing and logistics sector. This decision was made following the transfer of the previous Secretary of Industries, who had opposed the proposal due to constitutional and legal challenges.

Benefits of Industry Status

With the new industry status, the warehousing and logistics sector will enjoy several advantages, including:

• Exemption from Minimum Equity Requirements: Businesses in this sector will not need to meet minimum equity requirements to borrow from the central bank.
• Tariff Concessions on Machinery Imports: The sector will now pay only 5% customs duty and zero sales tax on machinery imports.
• Concessions on Industrial and Gas Charges: The industry will benefit from new concessions, reducing operational costs.

Controversy and Provincial Endorsement

The decision to grant industry status to the warehousing sector has not been without controversy. Federal bureaucracy initially resisted the move, arguing that under the 18th constitutional amendment, industry is a provincial matter. The prime minister responded by replacing the Secretary of Industries to ensure the policy was implemented.

Despite some reservations, provincial governments, including Sindh, have endorsed the proposal, though Sindh’s support is conditional on alignment with existing rules and regulations.

Conclusion

The government’s approval of the Rs60 billion relief package and the granting of industry status to the warehousing and logistics sector reflect its commitment to addressing economic challenges and supporting vulnerable populations. However, these decisions also highlight the complexities and controversies involved in implementing such policies.