The federal government has announced a petrol subsidy of Rs 50 in Pakistan 2023 today on March 19. In response to the directives of Prime Minister Shahbaz Sharif, the government is currently working on a plan to provide relief to low-income individuals who own motorbikes but struggle to afford the high cost of fuel. The plan includes the implementation of the mutual support scheme which will cost 120 billion rupees.
The government intends to finance this subsidy by imposing an additional charge of 50 rupees for every liter of petrol purchased by wealthy car owners. However, the plan ran into some snags.
According to the sources, Prime Minister Shahbaz assigned Minister of State for Petroleum Mossadeq Malik with the responsibility of finding a mechanism to provide subsidized gasoline to poor motorcyclists. At the last Cabinet meeting, the Prime Minister requested more information from the Minister of State. The latter replied that several meetings had been held, and a mutual support mechanism had been developed.
During these meetings, it was revealed that a total of 120 billion rupees would be needed to provide affordable petrol to motorcyclists. The money for this scheme will come from people who own expensive cars.
Eligibility Criteria for Petrol Subsidy in Pakistan 2023
The following vehicles are eligible for the 2023 fuel subsidy:
- Cars under 800 cc
Who are the consumers eligible for petrol subsidies?
The Petrol Subsidy Scheme is designed to benefit low- and middle-income consumers who use petrol for their personal cars, motorcycles or generators. The scheme will prioritize the following categories of consumers:
- Registered taxpayers who earn less than Rs 100,000 per month
- Unregistered taxpayers who earn less than Rs 60,000 per month
- Farmers who own less than 12.5 acres of land
- Small business owners with less than 10 employees and a turnover of less than 10 million rupees per year
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|category||income limit||Required Documents|
|Registered taxpayers||100,000 rupees per month||National identity card, tax registration number and tax return|
|Unregistered taxpayers||60,000 rupees per month||National identity card, proof of income and self-declaration form|
|farmers||Less than 12.5 acres of land||National identity card, land ownership certificate, and agricultural book|
|Small business owners||Less than 10 employees and 10 million rupees turnover annually||National identity card, business registration certificate and financial statement|
To qualify for the subsidy, consumers will need to provide their national ID card, tax registration number, and other relevant documents to fuel retailers. Support will be provided on a first come first served basis, subject to availability and verification.
What are the advantages and challenges of the petrol subsidy system?
The petrol subsidy scheme has many potential benefits for consumers, the government and the economy. Some of these benefits include:
- Lower cost of living for eligible consumers, who will save up to 6,000 rupees per month on petrol expenses
- Increase the purchasing power and disposable income of eligible consumers, who may spend the money saved on other goods and services, thus stimulating demand and growth
- Increase compliance and tax revenue for the government, as more consumers can register for tax and contribute to the formal economy
- Reducing gasoline smuggling and fraud, as subsidized gasoline will be sold only to eligible consumers who can be identified and monitored
- Increased social and political stability, as subsidies may help alleviate some of the grievances and protests by affected consumers, who often face inflation, unemployment and poverty
Pakistan’s Rs 50 petrol subsidy scheme is a bold and ambitious measure by the government to address the persistent problem of petrol affordability for low-income and middle-class consumers.
While the scheme has some potential benefits and challenges, its success will depend on effective implementation and monitoring by government, the cooperation and transparency of fuel retailers and other stakeholders, and the support and feedback of qualified consumers and the wider public.