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Government Subsidy Missteps


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In a surprising move, the interim governments of Punjab and Khyber Pakhtunkhwa have recently launched a massive free atta (flour) distribution initiative, costing Rs53 billion in Punjab and Rs19.8 billion in KP, aimed at providing relief from soaring food prices during Ramazan. However, this hastily devised program has sparked serious concerns regarding its design, legality, and effectiveness.

This initiative, while well-intentioned, has been executed with a lack of transparency and forethought, raising questions about its feasibility and the wisdom of caretaker governments approving such substantial expenditures. What’s more, it seems to disregard an existing and successful targeted subsidy program, the Ehsaas Rashan Riayat Programme, which could have been leveraged to ensure a more efficient and citizen-friendly approach.

The Ehsaas Rashan Riayat Programme, launched by the federal government in January 2022, was a groundbreaking digital initiative designed to provide subsidies to deserving households through a network of mobile Point of Sale-enabled stores. This program aimed to replace inefficient untargeted subsidies with a more precise and transparent system. However, it faced setbacks when defunded by the previous government in June 2022.

Despite these challenges, the program continued on a provincial level in Punjab, with Rs100 billion allocated to support millions of low-income families. Its approach prioritized dignity and choice for beneficiaries, allowing them to access subsidized goods at their local stores throughout the month. Transparency was ensured through digital receipts and two-factor authentication.

In contrast, the Ramazan atta subsidy program is plagued by issues on multiple fronts. Distribution points have become chaotic, with citizens waiting for hours and reports of people collapsing or even dying in the rush to receive flour. This approach not only lacks dignity for beneficiaries but also raises safety concerns.

Transparency concerns are also evident in the new program, with the potential for leakage and corruption due to a lack of robust controls. The absence of detailed transaction records and digital receipts opens doors to malpractice and fraud.

Efficiency is another area where the Ramazan atta program falls short. The setup costs for province-wide distribution points and the need for thousands of government staff make it a costly endeavor for a program that lasts just four weeks. Additionally, it fails to address the ongoing issue of inflation beyond Eid.

A more pragmatic approach would have been to redirect the funding towards the existing ERRP, which could have been expanded quickly and cost-effectively. The Punjab Social Protection Authority had the infrastructure and experience to run the program efficiently.

With news of a targeted fuel subsidy for the poor on the horizon, there is a risk that the federal government may repeat the same mistakes by hastily creating a new program instead of building upon the existing Ehsaas subsidy platform. Integrating this platform with fuel stations nationwide could provide subsidized fuel to eligible beneficiaries with minimal technical development required.

It is unfortunate that political considerations often obstruct efficient service delivery. If each government continues to erase its predecessor’s work and reinvent the wheel, the nation will remain stuck in a perpetual cycle of inefficiency.

The Ramazan atta subsidy program, though well-intentioned, is marred by issues of transparency, efficiency, and dignity for beneficiaries. Instead of reinventing the wheel, governments should consider building upon successful existing programs like the Ehsaas Rashan Riayat Programme to ensure better outcomes for the citizens they serve.

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