ISLAMABAD -  The government has drastically reduced subsidies by 17.8 percent for the next financial year 2017-2018 as compared to the outgoing fiscal year, which is likely to increase inflation in the country.

The government has allocated only Rs138.8 billion for the FY2017-2018 as against revised estimates of Rs168.95 billion of the outgoing financial year, showing a decline of over 17 percent.

According to the budget documents, the government has maintained the power subsidy at Rs102.5 billion for the next fiscal year.

The break-up of Rs102.5 billion showed that the government has earmarked Rs65 billion for inter-disco tariff differential as compared to Rs91 billion of the outgoing year. The government has allocated Rs8.5 billion subsidy for tariff differentials for agriculture tube wells in Balochistan and Rs10 billion subsidy to pick up WAPDA/PEPCO receivable from FATA.  The government has also set aside Rs15 billion for power sector reforms.

Meanwhile, an amount of Rs15.5 billion has been earmarked for K-Electric.

Similarly, the government has decreased the subsidy given at the Utility Stores Corporation from Rs7 billion to Rs4 billion for the next year. The government has allocated Rs1.5 billion for the Ramazan package and Rs2 billion for the sale of sugar at state-run stores.

Meanwhile, the government has also reduced the subsidy amount for PASSCO from Rs18.55 billion to Rs16.54 billion for the upcoming financial year. The government has kept Rs2 billion for wheat operation, Rs5 billion for wheat reserved stock, Rs8.05 billion for wheat supplied to Gilgit-Baltistan and Rs1.5 billion for support for wheat exports.

According to the budget documents, the government has withdrawn subsidy on fertilisers for the next fiscal year, as it had allocated massive Rs25 billion in the outgoing year. It has also allocated Rs300 million subsidy for the sale of wheat in FATA.