The Korangi Association of Trade and Industry (KATI) has strongly criticised the government’s policy of imposing cross-subsidies on the industrial sector, warning that extracting Rs131 billion from industry to subsidise electricity for lifeline consumers is pushing Pakistan’s economy towards collapse.
In a joint statement, KATI President Muhammad Ikram Rajput and Acting Patron-in-Chief Zubair Chhaya said the policy was devastating for domestic industry, leading to factory closures and a sharp rise in unemployment. Ironically, they noted, the resulting job losses would ultimately harm the same low-income groups the government aims to support through subsidised electricity.
The KATI leaders said the amount being collected from industry under the cross-subsidy mechanism was effectively an additional tax. This money, they explained, is being used to provide electricity subsidies to consumers using up to 300 units per month. While providing relief to low-income households is a positive objective, shifting the entire financial burden onto industry amounts to “economic suicide”, they said.
“There is no example in developed or developing economies where industry is burdened with such massive cross-subsidies,” the statement said. “We may be providing cheaper electricity to the poor, but at the same time, industries are shutting down, factories are closing, and workers are losing their jobs.”
KATI warned that unless the policy is reviewed immediately, the country could face declining exports, capital flight and a severe slowdown in industrial activity, with far-reaching consequences for the overall economy. Supporting industry, the association stressed, is essential to protecting employment and economic stability, whereas funding subsidies by penalising industry jeopardises Pakistan’s economic future.
The association also highlighted that the Pakistani industry is already under intense pressure due to high electricity tariffs, elevated interest rates, rising raw material costs and heavy taxation. In such circumstances, forcing industry to bear billions of rupees in subsidies is unsustainable, they said, adding that the sector has reached the brink of collapse and further unit closures are likely if the policy continues.
KATI urged the government to arrange funding for lifeline consumer subsidies through alternative means, including general tax revenues, austerity measures, reductions in non-development expenditures or other social protection programs, rather than further weakening the industrial base.
