Cutting subsidies to increase poverty

KARACHI: The World Bank released the Food price Index on Wednesday which suggests that the price of wheat increased in Pakistan by 16 percent between June and December, leading to a rise of 1.9 percent in the level of poverty.

The index depicts that the cause of poverty is the poor policies of the government by virtue of gradually curtailing indirect subsidies.

It seems that against the traditional economic policies of the under-developed country subsidies are considered essential for controlling poverty.

The countries that have similar economies to Pakistan are struggling with adjustment policies to restrict wheat prices under market control.

Pakistan has opted the policy to eliminate subsidies of basic needs like food and energy.

The trend of food price hike of 2008 to 2010, witnessed sharp increases with relatively smaller increase in the global price of wheat, maize, sugar and edible oil.