Prime Minister Imran Khan at his party’s meeting in Islamabad on November 15 termed the current spell of the price- hike in the country as “artificial” and a “conspiracy” against his government. The economists, however, believe that it is not a conspiracy against any government but , in fact, a mismanagement and bad governance on part of the government machinery especially at the provincial and local governments’ levels that have miserably failed to maintain control over prices.
They have also argued that the present price hike is mainly because of rise in inflation rate because of a number of economic factors: substantial increase in the prices of the utilities like gas and electricity, petroleum products, reduction in agriculture production and devaluation of Pakistan rupee, which caused increase in rates of imported products. Government’s increased borrowings from banks and international lenders because of the low tax recovery and increase in interest rates are other some economic reasons for rising inflation, said a senior economist Dr. Shahid Hasan Siddiqui, Chairman of Research Institute of Islamic Banking and Finance.
He said the hoarders and mafias also play their role in increase in prices of commodities and products. They have official machinery’s support. Increase in sugar and wheat prices are some examples, he added. Indirect taxes have also increased, which has affected the middle and poor classes negatively, said Dr. Siddiqui.
The provincial food departments in both Sindh and Punjab have failed to control smooth supply and demand of the essential commodities like wheat and flour. Flour millers in Sindh have been complaining that the commodity traders are hoarding the wheat to manipulate the prices. Moreover the provincial government’s food department did not procure wheat in Sindh this year on the pretext that the government godowns were full due to last year’s storage. This has resulted in exponentially increase in price of a 100 kg bag of wheat in November against in April, when new wheat crop arrived in the market.
Flour millers say this year wheat crop was not short but due to corruption, mismanagement and inefficiency in the provincial governments the prices have increased and are still rising. This year the government had also allowed export of wheat, which was later banned in September but a lot of the new crop’s products were already sold out abroad. According to the statistics of Department of Plant Protection under the Ministry of National Food Security and Research Pakistan exporters send around 17655 tons of wheat between the period from August 1, 2018 to August 25, 2019.
The millers said when the government had realized that earlier estimates of the supply were not correct it should have allowed wheat imports to fill the gap. But it was not done.
It is a matter of the fact that Sindh’s wheat crop comes early in the market and this year due to provincial food department’s failure in official procurement of the commodity the profiteer traders found an opportunity to make profits, so they purchased the crop at cheaper rates from Sindhi growers and sold the commodity in Punjab markets at higher margins. It is a matter of the fact that increase in wheat price has not benefit ted the growers in any case. Only traders have minted the money.
Interestingly, in Punjab there was an official ban on the movement of wheat from the province so with arrival of new crop this was locally consumed. But earlier supplies from Sindh to Punjab resulted in artificial shortage of wheat in Sindh, thus the price of 100 kg bag of wheat was increased to Rs. 4,400. The federal cabinet’s Economic Coordination Committee (ECC) on hue and cry had to ask the Pakistan Agriculture Storage and Services Corporation (PASSCO) to release 650,000 tonnes of wheat to the three provinces — Khyber Pakhtunkhwa (KP), Sindh and Balochistan. Sindh has reportedly received 100,000 tonnes from PASSCO so far.
The expert term the price hike because of full control of mafias on supply of essential food items like sugar, wheat flour, milk. The district administrations which are responsible for price control have, in practical terms, miserably failed to control the prices. For example, the Commissioner of Karachi has fixed price of a liter of milk at Rs. 94 but nowhere in the city it is available at the official rate. But it is being openly sold at the rate of Rs. 110 to 120/ liter.
“We have been raising our voice at the meetings on price control at Karachi Commissioner office on regular basis, but the administration seems helpless before these profiteers,” said Shakeel Baig, Chairman of Consumers Rights Protection Council of Pakistan.
Similar is the situation of prices of roti or naan. The government has asked the Tandoor owners to sell a 150 gram roti at the rate of Rs. 10, but it is not being sold at official rate anywhere in the city. “We have conducted our own research in the market and we have found that normally Tandoors sell a naan which is of weight of only 110 or 120 grams, which cost them around Rs. 8 after calculating all expenses, but they are not ready to reduce the prices,” he said. Tandoor owners however have their own complaints of increase in flour and gas prices.
In August the Prime Minister after public complaints had asked the gas companies to reduce gas rates for naan/roti makers so they are able to sell roti at reduced prices. But reports from different cities indicated that prices were not reduced anywhere.
Electricity, gas and petroleum prices have increased in Pakistan since early 2018, which has affected every section of the society. The Gross Domestic Product (GDP) growth rate has shrunk this year to 3.1 percent and the growth in large scale manufacturing was reported negative due to financial crisis.
The recent sky-rocketing prices of fruits and vegetables especially tomatoes due to failure of local crops has also made the lives of consumers miserable. Once the prices of a kilogram of tomato crossed Rs. 400, the government found no other solution but to allow imports of tomatoes from neighbouring Iran, which took some time to reach Pakistani markets.
Tomato import from eastern neighbor India is already banned due to technical reasons. Some three years back Pakistani quality managers found infectious germs in Indian tomatoes, so they put a ban, which is continued. However, local production of tomato is quite sufficient to suffice the country’s demand. Sindh is the first province, where crop ripens first followed by Southern Punjab and Balochistan. But this year tomotta tomato crop in Sindh was badly affected due to climate change effects. It was destroyed at its sowing stage due to heavy monsoon rains followed by untimely rains in September and October, which resulted in heavy losses to growers. The local farmers had to re-sow the tomato seeds after end of wet spell, but the crop was 40 percent less, a local farmer said. The local tomato crop from southern Sindh especially from Badin district has started arriving in Karachi’s vegetable market, however it is still insufficient to fulfill local demands.
With the arrival of Iranian supply the prices of tomatoes have substantially dropped to Rs. 200 a kilogram.
