NationalVOLUME 16 ISSUE # 11

Living with shortages and rising prices

The Pakistan Tehreek-e-Insaf (PTI) government failed to ensure smooth supplies of essentials and price stabilisation in the first half of its term. Flour and sugar shortages persisted and their prices continued to rise throughout the year. The situation is feared to remain the same or worsen in the remaining tenure of the government as the State Bank of Pakistan has projected average inflation in the current fiscal year to remain in the range of 7–9pc.

The government allowed the export of wheat and sugar, for which it even provided subsidies to the millers and exporters, but then had to import them when the country faced shortages and their prices increased substantially. According to media reports, the mishandling of the crisis cost the country over $520 million in imports and over Rs100 billion losses to the national exchequer and consumers had to bear the brunt by paying 50pc higher prices in 2020. Besides, fluctuation in supplies and prices of vegetables persisted through the year. According to the Pakistan Bureau of Statistics (PBS), wheat flour was available at an average price of Rs45/kg in December 2019. Its rates increased to Rs67 by December 24, 2020 – a hike of Rs22 or nearly 50pc. The better quality wheat flour cost even more, in the range of Rs80 to Rs85/kg in the open market. Sugar was available at Rs71 per kg in December 2019, but its prices jumped by over 26pc to Rs90/kg in December. It sells at Rs100/kg in the open market.

The government remains in a state of denial over the shortages and high prices and claims the media is twisting the facts to malign its image. However, the common people are already facing the toughest time of their lives in terms of rising living costs fuelled by record-high food inflation. In the absence of an effective price checking mechanism at provincial and city government levels, prices of daily-use items fluctuate on a daily basis. The prices remained on the higher side mainly because of currency devaluation. Inflation has risen to the highest level in nine years and the central bank warned that it could rise beyond the target set for the current fiscal year. Though the government claims it has come out of the economic crisis, yet all indicators paint a bleak picture for the people. The frequent power tariff hikes have also added to inflation. The prices of essentials will continue to rise as the government blatantly passes on the costs of its own inefficiency, power theft and line losses to consumers. There are some indicators that the economy is heading to a positive direction, but the common people have suffered badly in the process. The government does not hesitate from overburdening the people with price hikes. People are worse off in the PTI government. They have been forced to miss the past Pakistan Muslim League-Nawaz (PML-N) government despite its ills.

Prices and unemployment have reached their highest level in Pakistan. The situation has worsened in the aftermath of the coronavirus pandemic and if latest projections by international financial institutions are any guide, there will be no respite for people in years to come. Though prices are expected to come down in the next few years, yet the unemployment rate will continue to rise in the foreseeable future. It means more people will lose their jobs in the coming years. Pakistan’s economy, which contracted in the last fiscal year, is projected to grow by only 1pc in fiscal year 2020-21, according to the International Monetary Fund (IMF).

Undoubtedly, Pakistan performed impressively to contain human losses during the pandemic, but lockdowns and measures to contain the virus have affected its fragile economy badly. All advanced and regional countries, which had better economies, are recovering fast, but Pakistan lags far behind, though it had made structural adjustments before the onset of the pandemic. Rising prices and unemployment are the biggest issues of Pakistanis and there is no immediate relief for them. Inflation in Pakistan could be 10.2pc on an annualised basis, which by 2025 is expected to remain around 8.6pc and the unemployment rate, which till this fiscal year was 4.5pc, may further jump to 5.1pc. The IMF projected an over 13.3pc increase in unemployment in Pakistan in a year.

Earlier, the World Bank also saw an “anaemic” economic outlook of Pakistan, with the growth rate of just 0.5pc in the current fiscal year. Pakistan’s economic outlook remains fragile for at least two years, as the pandemic compounded the country’s miseries. In a report, it forecast an increase in current account deficit, budget deficit and public debt. While domestic economic activity is expected to recover, as lockdown measures are lifted, with a gradual decline in active Covid-19 cases, Pakistan’s near-term economic prospects are subdued, the report said. The economic growth in Pakistan is projected to remain below potential, at 0.5pc for FY-21, compared to over 4pc annual average in three years to fiscal year 2018-19. Given anaemic growth projections in the near term, poverty is expected to worsen. Poverty has increased by 33pc in India and the situation is not different in Pakistan, it noted.

It is a fact that past governments failed to make structural changes and improve governance but the PTI government cannot continue to blame them even after completing almost half of its tenure. Consequences of all blunders, mismanagement and inaction of the past governments lie on the table of Prime Minister Imran Khan and he has no option of failure. The government aims to introduce more reforms in the next few months. It means there is no prospect of relief for the people anytime soon and they will continue to suffer in years to come.