EDITORIAL: Shortly after taking oath as the Khan administration’s fourth finance minister on 16 April 2021, including the 17 days of Hammad Azhar holding the portfolio, Shaukat Tarin has repeatedly directed the Pakistan Bureau of Statistics (PBS) to (i) strengthen its data collection through expanding the number of markets it surveys in the collection of data on prices; and (ii) to gather empirical evidence on a range of theories that continue to be bandied about by government including the large windfall profits on sale of agricultural produce raked in by the middlemen with capital from tax evaders and money launderers who, reportedly, purchase and hoard farm output. Tarin’s predecessor had also expressed concern at the rate of inflation calculated by the PBS, as did Razzak Dawood the Adviser to PM for Commerce, though as per PBS he failed to issue any directives or indeed convey concerns about the credibility of the data. Thus the directives issued by Tarin while chairing the Price Monitoring Committee must be appreciated and one would hope that PBS is engaged in re-assessing the calculation of data that in turn strengthens the hand of the executive to deal with the root cause of the problem.
The two statistics most relevant to an electorate are unemployment and inflation. Sadly, without labour exchanges and the sustained inability of PBS to calculate the number of indentured workers or haris/mazaras on our farms, has tied the hands of data collection agency disabling it from accurately calculating unemployment. In addition, several small to medium enterprises operate outside the formal economy while large-scale manufacturing units and a significant portion of the associated downstream industries are perhaps the only sub-sector(s) in the private sector that are industrious about posting accurate data. It is for these reasons that the unemployment rate cited has historically never reached double digits. One would hope that this is dealt with to the extent possible perhaps through some synchronicity between the PBS and the Ehsaas/Benazir Income Support Programme – a critical exercise that would strengthen the government’s capacity to take informed decisions. It is significant to note that there is under-employment in the country too.
Inflation, with serious implications on an administration’s popularity, to-date has been held hostage to successive finance ministers’ desire to show good performance to the chief executive and cabinet colleagues accounting for it being understated. The understatement was not always tampered with by the credibility quo-efficient which is a function of the purchases (value of each rupee earned) possible during a householder’s weekly shopping. If one adds hoarding to raise prices, raising transport costs through higher taxes on petroleum and products, higher money supply due to heavier than ever government borrowing, a higher budget deficit and last but not least slashing incomes in the private sector (a spiral evident from May 2019 to March 2020 due to contractionary monetary and fiscal policies being implemented in the aftermath of the Extended Fund Facility programme agreement signed with the International Monetary Fund) with income freeze in the public sector (as per the budget 2020-21) then inflation goes into double digits.
Inflationary fiscal and monetary policies aside inflation in this country in recent months has also been a function of failure to tackle pressure groups engaged in windfall profits. Thus in spite of bold decisions to release damning sugar and wheat inquiry reports the price and supply of these two items remain a source of concern. The government, like its predecessors, has tackled the issue through imports (which have put pressure on the external value of rupee with a consequent impact on domestic inflation) as well as subsidies which raises current expenditure and therefore the budget deficit which impacts on inflation. While the Prime Minister is partly correct because the “colluders” raising prices need to be dealt with yet he has yet to come up with a viable action plan to deal with them though he constantly berates them. One way would of course be to wait for PBS to provide the empirical evidence as directed by Tarin but there is also a need to legislate to strengthen the Competition Commission of Pakistan to take appropriate action with stay orders issued by the courts given only in limited instances or better still to ensure that all cases relating to such stay orders are heard promptly (within a matter of six months). Another way may well be for the Securities and Exchange Commission of Pakistan not to allow the sub-sector specific entities that provide the platform for collusion.
Copyright Business Recorder, 2021
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