Pakistan's Rs75 Billion Fuel Subsidy: A Political Goal and the Void Where the Poor Stand

Pakistan's Rs75 Billion Fuel Subsidy: A Political Goal and the Void Where the Poor Stand

In a press room in Islamabad, when an official read out the figure of Rs75 billion, no one among the reporters present applauded. It was the kind of silence I once encountered at AAMI Park after the final whistle — not the silence of calm, but the silence of a question with no answer yet. The three-month fuel subsidy, aimed at two-wheelers, three-wheelers and small cars, arrived at a moment when domestic fuel prices had climbed 44 to 50 percent in twelve months. In a country where people are long accustomed to price shocks, a subsidy is always greeted with two emotions at once: relief and suspicion.

I follow matches with a notebook and a pencil. I read a budget the same way. The first thing I wrote down was not the number 75 billion, but the question that accompanied it: who actually receives this money. In sixteen years on the beat, I have learned that every number has two faces — the one announced and the one forgotten. The task of a beat keeper is not to cheer the number, but to find the second face.

Context: a country racing inflation and racing itself

Pakistan entered this period with heavy fiscal baggage. Soaring fuel prices dragged direct and indirect inflation along with them: transport costs rose, food prices climbed, and the burden landed on households already struggling. Against that backdrop, the government chose a symbolic solution: direct fuel subsidies.

Specifically, the Rs75 billion subsidy runs for three months. Owners of two-wheelers and three-wheelers receive Rs2,000 per month for 20 litres of fuel. Owners of small cars receive Rs3,000 per month for 30 litres. In parallel, the Petroleum Levy remains at Rs80 per litre — an important revenue stream for the budget. Total national petrol and diesel consumption sits at roughly 1.5 billion litres per month, a vast figure that reveals the scale of this energy market.

On the budget side, the State Bank of Pakistan (SBP) is reported to have transferred about Rs500 billion above plan, while the Federal Board of Revenue (FBR) reported meeting its collection targets. In other words, the government was not entirely empty-handed when it rolled out the subsidy. The question is not whether there is money, but how it is spent — and for whom.

This is where I want to linger. In sport, when a club spends on an expensive signing that does not solve its weakest position, people call it the right money on the wrong man. Pakistan's subsidy policy now faces a similar doubt. And that doubt does not come from sentiment; it comes from the structure of the programme itself.

Analysis: a subsidy that misses its target, delivered through a leaky mechanism

The first notable point lies in the structure of the beneficiaries. The subsidy targets owners of two-wheelers, three-wheelers and small cars. But according to the analyses on the table, the poorest third of Pakistan's population cannot even afford a motorbike. They own no vehicle, meaning they are not on the beneficiary list, meaning they receive not a single rupee of subsidy.

This is a structural paradox: a policy meant to ease the burden on the vulnerable inadvertently skips the most vulnerable of all. The poorest do not ride motorbikes; they walk, take buses, or depend on public transport. But rising fuel costs push bus fares up, push food prices up, push every living cost up — while they receive no direct offset. The subsidy should have reached them, but the mechanism designed it out of the queue from the very first gate.

High-Speed Diesel (HSD) deserves special mention: it is the fuel that runs the whole economy — trucks, buses, farm machinery, generators. When HSD prices rise, that cost seeps into every loaf of bread, every bus ticket, every bag of rice. The poor do not own diesel vehicles, yet they are the ones who feel diesel prices most keenly — through the daily market bill. The subsidy is not directed at HSD, which means the most vulnerable continue to bear the largest share of the loss.

A subsidy that misses its target is one problem, but a subsidy too small relative to the price rise is a graver one. Fuel prices rose 44 to 50 percent over twelve months, while the support is only Rs2,000 to Rs3,000 per month. For a household spending tens of thousands of rupees on fuel and related living costs, that offset is little more than a gesture. It shows the government cares, but not that the government can solve the problem.

I have seen clubs roll out signings trumpeted by the media, only for people to realise weeks later that the player was not filling the position that mattered. This subsidy carries a similar flavour: it creates a strong message, but not a change proportionate to the lives of its beneficiaries.

The third issue is the delivery mechanism. Any subsidy programme built on verifying vehicle ownership and paying monthly faces a high risk of leakage. Administrative costs, rent-seeking, and gaps in verification mean the money may not flow to those who need it. Some analyses themselves state bluntly that this subsidy has low efficacy and high leakage. That is a heavy accusation, and it comes without hard evidence — but the history of similar subsidy programmes lends it a certain credibility.

The fourth point, and perhaps the most technical: there is a clearer alternative. Instead of spending Rs75 billion on a hard-to-control subsidy mechanism, the government could cut the Petroleum Levy by Rs16 per litre for three months, taking it from Rs80 down to Rs64. With the same Rs75 billion, this option delivers broad-based relief: every fuel consumer sees a direct price cut, inflation is curbed at the root, and no complex administrative machine is needed to verify beneficiaries. Motorbike riders, bus passengers, train ticket buyers — all feel the effect, rather than a narrow group of registered vehicle owners.

To be clear: this is a proposal with an assumption attached. The assumption is that the IMF would not object to a Petroleum Levy cut, because the IMF's target on this indicator is not binary — while the real constraint sits on the primary fiscal balance, the budget excluding interest payments. If that assumption holds, the levy-cut option is structurally superior. If it does not, the whole argument collapses. And unfortunately the source article cites no programme document to confirm it.

Another point requiring verification is the Rs16-per-litre arithmetic. It assumes the full Rs75 billion is absorbed by the levy cut across 1.5 billion litres per month. But no detailed timeline for the offset is presented, nor any account of how consumption behaviour might shift when prices fall. In my trade, people do not publish a match result based on an unchecked calculation. The same should apply to a budget figure.

Contrarian Angle: some spending is not meant to solve a problem, but to create an image

Here I have to say what many observers are reluctant to say. If the subsidy neither targets the poorest, nor is large enough to create real change, nor survives execution without leakage, why did the government choose it anyway? The answer lies in what political analysts call political mileage.

The author of these analyses concedes that the subsidy may deliver higher political returns than direct cash transfers or fuel price cuts. In other words, the success metric is not the number of households lifted out of hardship, but the number of voters who register the government's goodwill. This is the logic behind programmes such as Sasti Roti, Yellow Cab and Laptop — initiatives launched in the past, generating loud fanfare, then fading into oblivion when real efficacy failed to match the original promise.

In sport, people call that winning in the stands. A team can win on image, win on media, win on crowd emotion — and still lose on the scoreboard. The problem with public policy is that it has no transparent scoreboard like a match. No referee blows the whistle when a subsidy goes astray. No VAR reviews whether the money reached the right hands. And that is the most dangerous void of all.

In Moscow, I learned that legends are not made by victories, but by the way people stand still while the world runs. The same holds for public policy: the value of a decision lies not in the applause at its launch, but in whether it holds up against reality. A Rs75 billion subsidy can command attention, but only results can answer whether it was worth the money.

One fair point must be stressed: the core figures in this analysis — the Rs16-per-litre levy cut, the Rs500 billion SBP transfer, the 44 to 50 percent price rise — are all flagged as requiring verification. A writer should not turn suspicion into conclusion. But nor should silence be turned into consent. The role of the beat keeper is to record both possibilities and wait for the data to speak.

There is a further layer rarely discussed: if a country straining to balance its budget chooses to spend Rs75 billion on a fuel subsidy, then other public sectors — including sport — are standing in the same allocation queue. In many countries, sport grows through long-term investment: infrastructure, coaches, youth development programmes. But such investment rarely generates instant political mileage like a subsidy. This is why I always look at the budget structure before the medal tally. A record can be built on a season's luck; a sporting nation is built only through investment sustained across decades.

As someone who has spent sixteen years charting every ball, I find this correlation familiar. Fiscal decisions such as fuel subsidies do not merely alter the lives of tens of millions; they shape the foundational conditions for every non-economic sector. When money is sucked into inefficient mechanisms, the sectors that need it to grow are the ones that suffer. Few say this aloud, yet it is the practical consequence of every budget decision.

Takeaway: the signals to watch

Three signals will determine where this story goes. First, the actual disbursement report for the subsidy: if coverage among intended beneficiaries comes in low, the leakage thesis is confirmed. Second, the IMF's response to any adjustment of the Petroleum Levy: any statement on primary-balance conditionality will confirm or refute the core assumption. Third, the path of diesel prices and domestic inflation: if prices keep climbing, the argument that the poor remain uncompensated becomes harder to refute.

When the locker room falls silent and the sound of boots on the floor fades, that is when I hear the pulse of the match most clearly. In Pakistan right now the applause has died down, and what remains is a question hanging over the budget sheet: where do these Rs75 billion actually flow, and who truly benefits from them. The answer will not come from a press release, but from verified numbers over the coming quarters. I will keep taking notes. Because the ball rolls on and forgets its path, but the page does not.