Cabinet gives approval to launch Ehsaas Targeted Subsidy Programme

Islamabad: The federal cabinet has given approval to launch the Rs120 billion Ehsaas Commodity subsidy programme for 20 million households across Pakistan.

Sources said that the federal cabinet under the chair of Prime Minister Imran Khan gave the approval to launch the Ehsaas Commodity subsidy program for those 20 million household people who have less than Rs31500 income per month.

The government under this program will provide Rs 1,000 per family per month to cover staple food items (wheat flour/Atta), daal, cooking oil/ghee) besides 25% of the food spend for low-income households to reduce the inflationary impact on the most vulnerable.

Similarly, the government will cover 20 million households across Pakistan with a PMT Score of less than 39 and an income of Rs. 31,500 per month by annual funding of Rs. 120

billion.

Moreover, the government has also authorized NBP to handle the execution of the program in collaboration with Ehsaas whereas the ministry of Finance assigns fiscal management and oversight of the program.

Under this program, the Federal government and all the federating units will share fiscal resources in the ratio of 35/65 except Sindh and Balochistan as they have not joined yet and the budgetary allocation may change; if both of these provinces will join the program.

Sources said that the government will also give a 5-10% (recommended 8%) incentive for Kiryana stores for (Rs —12 / subsidy transaction) on the value of the subsidy amounting to Rs. 7.3 bn for FY 2021.

This is to encourage them to shift from cash-based transactions to electronic dealings, open their bank accounts and purchase/install internet-enabled devices and compensate them for additional time spent on processing, the source added.

Sources said that the Poverty Alleviation and Social Safety division informed the cabinet that Pakistan has experienced a marked increase in commodity prices with prices of 3 major food items rising by 15% within a year.

Although the domestic increases are being driven by rising prices in the international market, inflationary control remains an important policy objective for the government.

Sania Nisthar informed that the government wants to help the financially vulnerable groups in society by Launching the ETCSP for this, the State Bank of Pakistan has nominated the National Bank of Pakistan (NBP) as the sole national agent for this subsidy program.

Sources said that ETCSP is designed to be a precision-target system of subsidy delivery focusing on deserving beneficiaries to provide financial assistance for the purchase of essential commodities at a discount through digitally processed transactions at ETCSP-enlisted stores, using a mobile P (mPOS). This will include Utility Stores Corporation outlets as well as local Kiryana stores.

The program may enable the government over time, to remove current untargeted subsidies and move to targeted-subsidy-only mechanisms as envisioned in this paper. The government may choose to reduce the size of the targeted subsidy program or end it once the current inflationary cycle ends or the economic situation improves.

According to the ETCSP design, enlisted stores and beneficiaries will go through a rigorous verification process to minimize the incidence of fraud.

Sources said that the beneficiaries will register through a secure portal, with eligibility cut-off authenticated by BISP, family information validated by NADRA and CNIC-Mobile number pairing certified by Pakistan Mobile Number Portability Database (PMD, PTA).

At the time of availing subsidy, beneficiaries will be required to go through 2-factor authentication consisting of physical verification of CNIC and an OTP sent to the beneficiary’s registered mobile number; and the Kiryana stores will go through all checks mandated by the SBP including CNIC verification by NADRA, SIM ownership authentication by PMD/PTA, all banking checks and biometric verification.

It is pertinent to note that Ehsaas and NBP have already executed a technical Pilot for evaluating the program design which tested the program’s operating model in several cities.

Hundreds of beneficiaries and Kiryana stores participated in the program, and all subsidy transactions were processed successfully, sources added.

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