Friendly Fire: Wheat Subsidy in Punjab, Pakistan

Abstract

During the past decade every year the Punjab government has faced an awkward situation at wheat harvest. It must buy millions of tons of wheat at an above-market price despite massive carry-forward stocks already lying in its granaries. Cost of procuring such huge quantities and subsidising sales to flour mills is enormous and is met with commercial borrowing. In recent years, the government has struggled to balance its accounts for wheat operations; its outstanding liability to commercial banks stood at Rs. 444.7 billion in June 2018, viz. 22 percent of the total budget of the province in 2017-18. Clearly, the government procures more wheat annually than it needs with borrowed money that it..