What is Targeted Subsidy?

 What is a Targeted Subsidy? DW Urdu contacted experts for details on this topic. Economists are constantly warning that the current wave of inflation is yet to intensify, with the hardest hit being the downtrodden poor.

According to Pakistan's National Bureau of Statistics (PBS), the general consumer price index has increased by 27.6% compared to last year.

In this regard, economists are constantly warning that the current wave of inflation in the country will intensify further, which will have the greatest impact on the depressed poor classes.
It is the constitutional responsibility of the state to meet the basic needs of such classes and according to many economists 'targeted subsidy' is the best way to deal with this responsibility.

But what is targeted subsidy? Before going deeper into this topic, let us have a glimpse of the citizens who are suffering due to the recent wave of inflation.
Pakistan: political or economic crisis, which is the preferred solution? "Every day I ask myself that today the children will not sleep if they are hungry."
58-year-old Shahid Iqbal has been a rickshaw driver for the past 21 years, but this is the most difficult time in his life.

Talking to DW Urdu, he says, “Every time there is news of an increase in the price of petrol, the heart sinks even more. The rickshaw drivers are also poor like us, if we increase the fare, no one is willing to sit and if we don't increase it, how can we meet the cost of fuel, the day we save twelve hundred, I am thankful that we got something.
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He adds, "Every day I ask myself that the children will not sleep hungry today." The last time I ate meat was when there was a wedding in the neighborhood. Can't even buy pulses and vegetables. Thank goodness the three Marles have their own house, otherwise, they would have died."

We also interacted with other rickshaw drivers there. He said that the electricity bill goes up to 3,000 in summer, "It may be a small amount for many people, but it becomes a headache for us."

We asked about 19 different rickshaw drivers, “Does their house have a fridge? So only two answered in the affirmative.
Saqib Naveed has set up a small pakora stall on the footpath outside Oriental College in Anar Kali. They are very worried about the rising gas prices. Speaking to DW Urdu, he said, "During the last six months, the price of gas has increased from 150 to 280 per kg.

Every day I fill two kilos in the cylinder and the evening I save barely seven to eight hundred rupees." His young son sitting with him said, "I have done matriculation but for the last two months I have been sitting with my father doing the same thing. I'm learning. Millions of people are unemployed despite having degrees, so I thought I'd learn it now."
'Targeted subsidy is the best way'
The former finance minister of Pakistan and renowned economist Dr. Hafeez Pasha has expressed his concerns in the light of the current growth rate of the economy in light of the current growth rate of the economy. Another 18 million people are at risk of falling below the poverty line during 2023.

Such a monotonous increase in poverty has probably never been seen before."
Talking to DW Urdu, he said, "In the current economic situation, the poor are suffering the most. Made on life for two meals a day. Our elites have not devised a system of subsidies, which directly and maximally benefits the poorest classes.

The targeted subsidy is the best way to increase poverty, a more comprehensive and effective system should be developed as soon as possible."
There is a trend of targeted subsidies in the world instead of general subsidies.
Waqar Shirazi, an expert federal bureaucrat in economic affairs and an economics teacher at the Pakistan Institute of Development Economics, while talking to DW Urdu, said, "When the neediest sections are identified instead of the entire population of the country, they are given concessions." If the necessities of life are provided at affordable rates, it is called a targeted subsidy.

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He explains, "The trend around the world is towards targeted subsidies instead of general subsidies to the population as a whole, which aims to ensure the provision of necessities to the poorest sections of society. Targeted subsidies can achieve better and more efficient results with lower budgets."

"We have the best infrastructure to provide targeted subsidies."
Waqar Shirazi, former country director of operations of the National Survey on Socio-Economic Status of the Population (NSER), says, “We have the best infrastructure to provide targeted subsidies.

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Elaborating further to DW Urdu, he says, “The Benazir Income Support Program is one of the five largest social security networks in the world. It collected digital data from more than 3.4 million households using the proxy man's test approach, which is now in a computerized database. Since the final score is determined by a computer with the help of 45 different variables, the chances of bias or favoritism are almost non-existent.

Therefore, it is a very effective, reliable, and scientifically sound structure."
'Government needs to double the amount by at least
Speaking to DW Urdu, former finance minister Dr. Salman Shah says, "The previous and present government have tried to give targeted subsidy but the amount is very less. The government needs to at least double this amount in the budget. Therefore, it is a very effective, reliable, and scientifically sound structure."
'Government needs to double the amount by at least
Speaking to DW Urdu, former finance minister Dr. Salman Shah says, "The previous and present government have tried to give targeted subsidy but the amount is very less. The government needs to at least double this amount in the budget. There is about 400 billion for this purpose now, which should go up to 800 billion." Should the poor be given cash under a scheme or cheap ration centers on the lines of utility stores? All these things need to be formulated as a formal policy as soon as possible.

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While according to Dr. Hafeez Pasha, only 22% of the required amount of poor families is being provided and its scope is limited to 7 million families, while the actual number of eligible families is more than 13 million families. Poverty is increasing at lightning speed, if targeted subsidies are not given at the same speed, millions of households will face the worst hunger.