Thursday, June 20, 2024

Finance Ministry Initiates Strategic Shift: Urea Subsidy and BISP Reforms to Empower Provinces

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ISLAMABAD: In a groundbreaking move to enhance provincial responsibility and streamline policies, the Finance Ministry, in collaboration with the Special Investment Council (SIFC), is poised to eliminate the urea subsidy and revamp the Benazir Income Support Fund (BISP). This strategic shift aligns with the principles of devolution, placing critical policy matters under the purview of caretaker administrations, subject to Election Commission of Pakistan (ECP) approval, according to sources close to Secretary Finance, as reported by Business Recorder.

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Urea Subsidy: Empowering Provinces for Agricultural Sustainability

Secretary Finance ImdadUllah Bosal communicated the decisive transfer of responsibility for the urea subsidy to the provinces during a recent meeting with provincial Secretaries of Finance. Federal Secretary of Industries & Production outlined the urgent need for provinces to communicate their urea requirements and cover the associated subsidy costs, emphasizing that the Federal Government could no longer sustain the financial burden. The call for collaboration among provinces to address this critical agricultural need was echoed by officials from Sindh and Khyber Pakhtunkhwa.

BISP Reform: Shifting the Paradigm of Social Protection

Regarding the Benazir Income Support Programme (BISP), the Finance Ministry is spearheading a comprehensive reform. Federal Finance Secretary highlighted that the provinces would be urged to share the financial burden of BISP, especially focusing on Conditional Cash Transfers (CCT) related to health and education sectors. The provinces will be given the flexibility to modify the program to align with their unique requirements.

Secretary PA&SS Division proposed a threefold approach, including provincial representation on the BISP Board, allowing provinces to tailor the program design, and sharing the Kafalat Program costs at a 50:50 ratio. Finance Secretary Punjab emphasized the readiness of his government to independently manage the social safety program.

Collaboration Amidst Financial Challenges

Provincial representatives from Balochistan, Sindh, and Khyber Pakhtunkhwa expressed concerns about assuming financial responsibilities due to their constrained financial situations. Finance Secretary Balochistan suggested deferring the transfer of certain expenditures until the next elected government takes office.

The Federal Finance Secretary underscored that these subjects fall within the constitutional purview of provinces, and caretaker administrations have the authority to address policy matters with the concurrence of the Election Commission of Pakistan.

Way Forward: Collaboration and Modality Workshops

Following an in-depth discussion, it was decided that Secretary PA&SS, Secretary BISP, and Finance Division would collaborate with Provincial Finance Secretaries to work out modalities for co-financing Non-Conditional Cash Transfers by the provinces and the complete handover of Conditional Cash Transfers.

This strategic realignment not only empowers provinces to take charge of critical agricultural and social protection initiatives but also marks a significant step towards a more streamlined and responsive governance structure. The collaborative efforts between the federal and provincial entities, facilitated by SIFC, are expected to pave the way for sustainable and effective policy implementation.

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