ISLAMABAD: The federal government has proposed a significant reduction in subsidies for the fiscal year 2026-27, with total allocations falling by 8 percent to Rs1.091 trillion from Rs1.186 trillion in the current fiscal year, according to budget documents.
The power sector will see one of the largest cuts, with subsidies reduced to Rs830 billion from a revised Rs893 billion in FY2025-26. Funding for electricity tariff support in merged districts of Khyber Pakhtunkhwa and agricultural tubewells in Balochistan has also been lowered.
However, subsidies for K-Electric have been increased by more than 30 percent to Rs163 billion, while support for Azad Jammu and Kashmir has risen to Rs81 billion. The government has also introduced a new allocation of Rs252 billion to address circular debt in the power sector.
No funds have been earmarked for payments to Independent Power Producers (IPPs), petroleum product subsidies, or RLNG supply to industry.
Meanwhile, allocations have increased for electric vehicle incentives, housing initiatives, and financing schemes. The Prime Minister’s Apna Ghar Programme has received Rs71 billion, while markup subsidies to phase out State Bank refinancing schemes have surged to Rs88 billion.
The best selling books of Republic Policy Think Tank including the land mark book, The Bureaucratic Coup are availabe at vanguard books, liberty books, readings, kitab sarae, sang e meel, saeed book stores, and others accross Pakistan. Contact for home delivery. 0300 9552542.
