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EDITORIAL: Finance Minister Shaukat Tarin chaired his first national price monitoring committee meeting after taking oath and made some observations and gave some directions. He reportedly expressed dissatisfaction at the Pakistan Bureau of Statistics (PBS) and emphasised the need for improvements subsequent to two provincial finance ministers challenging the wheat prices cited by the Bureau in Faisalabad and Quetta. PBS presented a briefing to the Minister on its data collection methodology prompting the Minister to also direct the Bureau to analyse the price differential in the entire supply chain – from farmer to end-consumer, including the wholesaler and the retailer. It is quite clear that the step is aimed at determining the profit margin of the middlemen accused of raking in windfall profits in Pakistan, a charge repeatedly levelled by Prime Minister Imran Khan.

The role of the middlemen aka Arthis is of key importance in the agri price and supply chain as besides their normal role of middleman in the disposal of farm produce they also act as agents of private money lenders to the growers at an exorbitant rate of 20 to 30 percent. The failure of most farmers to access bank credit is the basic reason for private money lenders operating with impunity in rural Pakistan. The so-called market committees suffer from inefficiencies and mismanage markets making it possible for the unscrupulous to thrive. None of these players is registered with the tax authorities and operate in the undocumented sector.

Tarin also directed the PBS to extend market coverage by including more cities and to include Ramazan sasta/sahulat bazaars and sought input from provincial representatives as to the efficacy of these bazaars and why there were long queues outside utility stores. These are all relevant questions and reflect the fact that the listed prices and availability of essential items at these bazaars come under the jurisdiction of the provincial governments and more particularly the local administrations.

With respect to a looming shortage of wheat, the Finance Minister emphasised the need for building stocks of 6 million metric tons as public sector stocks are at present enough to meet local demand of no more than two and a half weeks. Wheat output projected in the country at 6 million tons this year is 3 million tons short of the projected consumption which would imply importing this commodity to meet the shortfall – the second year running when wheat imports would be required to meet domestic demand. In 2020, around 3.4 million metric tons of wheat was imported against exports of wheat the year before. Poor weather conditions play a significant role in farm output in this country - more than in other countries - due to lack of mechanization and inability to use high yielding seeds by the large number of poor and subsistence level farmers; yet part of the problem lies in the lack of appropriate farm policies by the Khan administration. One would therefore hope that the government takes stock of the situation which is woefully characterized by an incremental deterioration in the performance of agri sector in order to reach informed decisions aimed at arresting the agri slide.

There is no doubt that data on prices released by the PBS does not have much credibility, and was challenged last year by Dr Hafeez Sheikh, the then advisor to the prime minister on finance and Abdul Razzak Dawood, advisor to the prime minister on commerce but to no avail. PBS officials denied that these observations were passed onto them that would have compelled them to revisit their methodology. It is important to note that reports indicate that members of the executive in general and the finance ministers in particular have directed PBS in the past to deliberately falsify data to show a lower rate of inflation as that would reflect well on their own performance. And at the cost of belaboring this point it is relevant to recall that during his first tenure as the country’s finance minister Dr Hafeez Sheikh (2010-13) slashed the weightage of food by 6 percentage points in the calculation of inflation which in turn literally halved the inflation rate overnight.

Neither Asad Umar nor Shaukat Tarin has been accused of data manipulation during their tenures as the finance minister; however there is a need to revisit the methodology as well as strengthen the PBS without any further loss of time.

Copyright Business Recorder, 2021