Govt mulls diesel subsidy for farmers amid rising fuel prices

ISLAMABAD: The federal and provincial governments are preparing a plan to provide a special diesel subsidy to farmers, who are facing difficulties due to a significant increase in petroleum product prices amid ongoing tensions in the Middle East.

According to sources, consultations are underway between the federation and provinces to finalize a subsidy package, particularly aimed at supporting small farmers.

Under the proposed plan, farmers owning up to five acres of land may be provided a subsidized package for the upcoming Kharif season. Initially, a subsidy of up to Rs1,500 per acre is being considered.

Sources said the subsidy amount would be transferred directly to farmers through digital wallet accounts, with funds allocated from provincial budgets. A similar mechanism is also being proposed for motorbike and rickshaw users, with provinces responsible for direct disbursement.

The formal announcement of the subsidy for small farmers and motorbike users is expected to be made by the federal government, while provinces will handle distribution under a defined mechanism.

Officials said the subsidy is being planned in response to rising petroleum prices caused by regional instability. Provinces are expected to allocate around Rs150 billion collectively for this initiative.

Data of small farmers is already available in Punjab and Sindh, which will help in efficient distribution. In Khyber Pakhtunkhwa alone, approximately 1.5 million farmers are likely to benefit from the diesel subsidy, according to Ministry of Finance sources.

Earlier, a high-level meeting on petroleum prices and targeted subsidy mechanisms was held at the Finance Division, chaired by Finance Minister Muhammad Aurangzeb.

The meeting was attended by the Chief Minister Punjab, Ms. Maryam Nawaz Sharif (virtually); Chief Minister Sindh, Syed Murad Ali Shah (virtually); Chief Minister Balochistan, Mir Sarfraz Ahmed Bugti; and the Finance Minister Khyber Pakhtunkhwa, Mr. Muzzammil Aslam (virtually).

Chief Secretaries of all four provinces (virtually), Federal Minister for Petroleum Mr. Ali Pervaiz Malik, Federal Minister for Economic Affairs Ahad Khan Cheema, Federal Minister for Information Technology and Telecommunication Ms. Shaza Fatima Khawaja, along with the Federal Secretaries of Finance, Petroleum, and IT & Telecom, and senior officials from relevant ministries, divisions, and regulatory authorities also participated in the meeting.

The Finance Minister of Pakistan, in his opening remarks, welcomed the participants and highlighted that the meeting was a continuation of ongoing consultations started under the guidance of the top political leadership for developing a coordinated and sustainable approach to petroleum pricing and subsidy reforms. He underscored the importance of collaborative decision-making and maintaining close coordination between the Federation and the provinces.