Economic Tsars need to find creative, homespun solutions
Already groaning under the weight of high inflation that is adversely impacting everybody’s purchasing power, for the common man the combined weight of the phenomenal increase in the electricity rates and petrol prices – a double whammy unleashed on the last day of September – may turn out to be the proverbial last straw on the camel’s back. Being a bastion of the right, the PML-N’s core constituency remains trading and mercantile classes and big business. Having protected its favourites in the budget, and not making the slightest movement towards legislating on the reformed GST that has the potential to not only pave the way for documenting the economy as well as considerably enhancing the yield from taxation, it went running to the IMF. And the IMF did what IMF does: shoving a frontloaded programme down the throat of its economic Tzar, Ishaq Dar. And he swallowed it – hook, line and sinker. The upshot has been devastating for the economy as a whole: Pak rupee is on an inexorable downward slide as a consequence of complying with the IMF formula that envisages, actually makes it mandatory for the government to facilitate, the steep fall.
Other than the psychological impact on the people and markets, it has put the skids under everything imported. And since Pakistan’s dependence is extraordinarily skewed in favour of petroleum products, the depreciation of rupee has had a force multiplier effect – over the cost of electricity production, transport and consumer goods. The removal of subsidies all around but especially on the prices of electricity, again under the IMF’s diktat, has made the plight of the people even worse. Just measure the distress that the poor have been put under: for consumers using 100 to 300 units a month, the increase is an unprecedented 210 per cent. This means: the monthly bill of a family consuming 300 units that earlier was Rs3,436 will go up by 87.5pc to Rs6,442. Coming from the lowest strata of society, this segment will be hit the hardest. Belonging to low-income, highly vulnerable category they barely run a couple of lights, as many fans, a fridge and a television. The indirect impact on those consuming less than 50 units, the poorest of the poor, too would be enormous, for they would be affected by the general price increase that comes from an upward revision in petrol prices.
The PPP’s Khurshid Shah, the leader of the opposition in National Assembly hit the nail right on its head while terming the sharp increase “a callous and thoughtless move, totally disregarding the plight of the poor”, and “a crushing burden on people already suffering because of inflation, lawlessness and unemployment”. His call for protest has resonated with the PTI, the MQM and the PML-F. While the opposition has every right to protest on wrong fiscal policy and the suffering of the people, it should eschew public agitation and confine itself to the parliament. The government for its part should listen to the criticism with patience and ask its economic wizards to find creative, homespun solutions to reduce the pain of the people instead of slavishly following the IMF policies that have been proved devastating here, there and everywhere.