- Unavoidable?
It was only so long that the government could continue delay raising power rates. That the announced it one day after the ‘Saudi bailout’ sweetner just shows that they wanted to treat the people to a little bit of good news before a lot of bad news. Yet, according to the government, the raise was inevitable. That is because they faced, once again, such a broken down system when they took over. And, sure enough, one of the biggest problems is the circular debt. Remember PML-N made a one-time, unaudited Rs500b odd payment to bring it down to zero? There must be a reason, then, that it has shot back to Rs1200b now.
The government’s explanation is that the raised rates will now feed into distribution companies choked with non-payment and debt. That, coupled with different percentage increase for different slabs, ought to make it as painless, rather as little painful, as possible under the circumstances. But that is only partly acceptable. The thing about slabs is that while the lower bracket gets the least chunk of the raise, it still ends up bearing increased second round costs every time people visit the market. And while it is not the present government’s fault that the previous administration left the kitty almost completely empty, it’s certainly not the common man’s fault either. And, like it or not, ordinary people are the sitting government’s responsibility.
After a hefty gas price hike, near 18pc rupee devaluation and 275bps increase in the interest rate since December, the power rate rise will further erode the common man’s earnings, already stagnating because of rigid wages and rising prices. Still the prime minister wants the people to accept increased trauma like treatment for cancer. While, to be fair to the government, such statements make perfect economic sense – especially if you’re still bracing for a Fund program – but not so much from a lower income group voter point of view, for example. Even if raising prices in the medium term is unavoidable, the government must realise that accommodating those who cannot afford it is also its responsibility.