When the government decided to dole out subsidies worth billions of Rupees on Petrol for the lower middle class, the global lender dubbed IMF’s (International Monetary Fund) representative stated that Pakistan didn’t consult us regarding the petrol subsidy proposal.
Esther Perez Ruiz said, “the IMF is seeking greater details on the scheme in terms of its operation, cost, targeting, protections against fraud and abuse, and offsetting measures, and will carefully discuss these elements with the authorities.”
The statement of IMF came after PM Shahbaz Sharif announced a new relief package for the low-income class of the country under which they will be given a petrol subsidy of Rs. 50 per litre.
“As a general matter, the IMF sees strengthening support for those eligible for social assistance through the unconditional Kafalat cash transfer scheme as the most direct way to help the neediest in Pakistan,” Ruiz added.
Rs. 50/L Subsidy, How Will It Work?
As per the economist Ali Khizar, the government is planning to implement it by using data sets from NADRA, phone companies, and vehicle ownership documents. “Bike, rikshaw, and small car beneficiary to be registered having phone and vehicle registered under the same name.
Implementation mechanics
Using data sets of NADRA, phone companies & vehicle ownership, bike/rikshaw/small car beneficiary is to be registered having phone and vehicle registered under same name (considerations are for extending it to NADRA family tree)
— Ali khizar (@AliKhizar) March 20, 2023
Further explaining, he wrote the users to get this benefit each time through a one-time password (OTP), have this on the machine at the petrol pump, and get their quota. For bikers, the monthly maximum limit is 21 liters, the average monthly consumption per PSO data, and the 24-hour cap for bikers will be 3 liters. Moreover, the monthly cap for small cars will be 30 liters.
User to get benefit each time through one time password (OTP) – have this on machine at petrol pump and get its quota
bikes cap 21 L/month (avg monthly consumption -PSO data)
Maximum 3 L benefit in 24 hoursSmall Car cap 30 L/month (1/3rd of monthly consumption)
— Ali khizar (@AliKhizar) March 20, 2023
The economist thinks that this policy would encourage higher bike usage versus cars, leading to less fuel consumption per kilometer which is good. But the subsidy can become insufficient if bike and small car usage exceed 50%.
It is doable to some extend
Questions
Why car user to cross subsidize bikers? Same argument is true for electricity and gas – why rich and middle class to provide for low income?Are there any legal hitches ?
— Ali khizar (@AliKhizar) March 20, 2023
What do you think about this subsidy on petrol? Would it work? Please share your thoughts in the comments section.
