EDITORIAL: Special Assistant to the Prime Minister (SAPM) on National Food Security, Jamshed Cheema, warned during a press conference late last week that food inflation will continue till April 2022, another five and a half months, till the next harvest. This may be considered a realistic assessment of the situation as it envisages raising the acreage under cultivation of essential crops and increasing yield per hectare in the next harvest - objectives targeted to be achieved through input subsidies and interest-free loans to the poor farmers. Cheema added that the government will provide low-cost certified seed to one million farmers, offer 24 billion rupees in subsidy on pesticides, two international firms are engaged in crop insurance and any farmer failing to get 75 percent yield would be compensated (pilot project in four districts alone - all in Punjab) and Kamyab Kissan Scheme envisaging interest-free loans to break the generational nexus between the aarthis, who manipulate supply to make windfall profits, and the poor farmers. While one may support these policy measures in principle, yet it is relevant to note that they do not differ markedly from those announced by previous administrations which, disturbingly, did not bear fruit.
Cheema's press conference however was extremely ill-advised from a political perspective because it raised some disturbingly obvious questions: given the harvest cycle, why did the government, which is into the fourth year of its five-year tenure, not take mitigating measures during the past three years to check food inflation which has been in double digits since late 2018? And critically, why rely on the same measures that failed during the last three years, including providing export subsidy to sugar mill owners, importing essential commodities to ensure that colluders cannot manipulate supply to make windfall profits, and failing to raise the yield per hectare of the poor subsistence farmers while the rich farmers had a yield well above the national average.
Cheema blamed the rise in the international prices of commodities as a reason for the rise in food prices. The international prices of petroleum and products have risen dramatically in recent months which, in turn, have raised the farm to market costs of perishable items as has the price of cooking oil with a direct impact on local prices. However, critics point out that the price of food continued to rise even when international prices of petroleum and products as well as cooking oil were declining last year during the global onslaught of the pandemic.
Cabinet members, including the SAPMs, are silent on the government's own contribution to inflation during the past three years due to policy measures ranging from: (i) a fast-eroding rupee (from 152 rupees to the dollar in May 2021 to over 170 rupees to the dollar four and a half months today); (ii) rising domestic indebtedness (from 16.5 trillion rupees inherited by the Khan administration to over 26 trillion rupees today) which has had serious implications on domestic prices; (iii) heavy reliance on external borrowing to shore up reserves in spite of record high remittance inflows (29 billion dollars last fiscal year); and last but not least (iv) the massive rise in expenditure, particularly current expenditure during the past three years - from 4.29 trillion rupees in 2017-18 (including foreign loan repayments of around half a billion dollars) to 7.5 trillion rupees in the current year (which includes Ehsaas programme of 246 billion rupees previously credited to development expenditure outside public sector development programme) though zero foreign loans repayment due to Pakistan availing the Debt Relief Initiative, delaying repayment, that was extended by the G-7 to provide relief in the aftermath of the pandemic.
It is quite unfortunate that Cheema's comments did not present a holistic picture of the true causes of food inflation in this country and one would hope that the Cabinet tasks all members to present a more holistic and credible narrative to the people of this country.
Copyright Business Recorder, 2021