EDITORIAL: Prime Minister Imran Khan while chairing a meeting to review the availability and prices of essential commodities emphasized, once again, the need to take appropriate administrative measures. His particular focus was on wheat and sugar - the two commodities on which a detailed inquiry report with recommendations was released to the public this year - and whose prices are continuing to rise notwithstanding. He also directed strict action against hoarders. The meeting was attended by advisors Dr Hafeez Sheikh, Razzak Dawood and Dr Ishrat Hussain, federal ministers Shah Mehmood Qureshi, Hammad Azhar, Syed Fakhr Imam, Ali Amin Gandapur, special assistants Shahbaz Gill, Usman Dar and Dr Waqar Masood, federal and provincial secretaries, State Bank of Pakistan Governor Dr Reza Baqir, and Managing Director Utility Stores Corporation.
One would hope that the list of attendees reflects a change in the mindset of the Prime Minister irrespective of the directives being identical to previous decisions taken by the cabinet based on the assessment that inflation, particularly food inflation, is entirely related to supply side issues. The inclusion of the Governor SBP in the meeting must therefore be fully supported as it is the central bank's primary responsibility to check inflation through an appropriate monetary policy, though he has been at pains to inexplicably insist that inflation is entirely due to supply side factors, over which he has no control; and the MD of USC who needs to identify the issue of wheat flour stocks not being sold with the general public lamenting the poor quality on sale at the government controlled price as well as shortages of sugar.
One would have hoped that Umar Ayub, the Minister of Energy, had also been invited to explain why he has been unable to check the sustained rise in the inter-circular debt, around 2.3 trillion rupees today as opposed to the 1.2 trillion rupees the government inherited; and why his ministry continues to support the same policy as those of previous administrations notably to achieve full-cost recovery not by improving performance but by raising utility rates with obvious implications on prices and the kitchen budgets of households.
One would also hope that Dr Hafeez Sheikh apprised the meeting of the latest budget deficit figure and its impact on the rate of inflation. Needless to add, the budgeted deficit of 7 percent in the current year, a highly inflationary target by itself, is also widely regarded as a gross under-estimation because the budgeted revenue is considered to be unrealistic and unlikely to be realized while expenditure may well outpace the budgeted amount as is usually the case.
The meeting, one would further hope, had taken cognizance of the concerns with respect to the lack of credibility of the Consumer Price Index data released by the Pakistan Bureau of Statistics (PBS) that were recently voiced by the two advisors, Dr Sheikh and Dawood, and to issue the necessary directives to strengthen the PBS. Sadly, the Prime Minister's office media wing did not deem it necessary to issue a statement in this context.
The Economic Coordination Committee (ECC) of cabinet meeting held the same day decided not to raise the wheat support price, with the objective of ensuring that wheat sowing is adequate to meet local demand in the next season, because of the fear that this would raise prices and be used by the recalcitrant 11-party joint opposition under the banner of Pakistan Democratic Movement (PDM) to strengthen its case against the Khan administration.
To date the administration has relied on subsidies and price controls to check the price hike like its predecessors; however, these measures have proved to be ineffective as the government continues to open more fronts that are compromising its effort to reduce prices - the front against the cartels and against hoarders and profiteers. True these groups are operating outside the law but to reduce prices today may require some form of interaction with them. The government will be required to successfully persuade them to help end shortages of essential items and punish them if they refuse to do it; hurling abuse at them is no solution.
Copyright Business Recorder, 2020
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