NationalVOLUME 15 ISSUE # 16

The relief package

Prime Minister Imran Khan has announced a Rs1.13 trillion package to support various sectors of society and the economy to offset the adverse impacts of the coronavirus. The incentives are welcome but their fair distribution will be a huge challenge for the government.

There are many loopholes in the package under the circumstance it was announced. Prime Minister Imran Khan said he would have imposed a curfew if Pakistan’s economy would have been as strong as that of the US or Italy. He rightly said that Pakistan cannot afford to implement the anti-coronavirus lockdowns seen in China and the West because large numbers of the poor will starve to death. Ironically, lockdown restrictions were intensified soon after the announcement of the package. It has already started hitting daily wagers in the country. They cannot reach their points to assemble, let alone find some work. They have generally huge families to support and have already been without work for many weeks.

The government has allocated Rs200 billion for the labour force and the provincial governments will also pool their resources. The funds aim to provide relief to workers, who are regular employees, and largely ignore workers who have to find work daily to support their families. To protect the export sector from global challenges, the government has allocated Rs100b payment of refunds immediately to improve cash flows for payments to the labour force. Another Rs100b was approved for deferred payment of loans for small and medium enterprises (SMEs) and agriculture and concessional loans to ensure their input costs do not go up. Also, Rs150b was earmarked to support vulnerable families by increasing their stipend from Rs2,000 to Rs3,000 per month for four months.

The Centre has also asked the provinces to come up with their support plans so that weak segments of society could be helped out. The network of panagahs (shelter homes) for the jobless and poor is being expanded so that the unemployed and weak could have meal and shelter. The Utility Stores Corporation would get additional Rs50b to ensure smooth supplies of essential commodities at affordable rates. However, their limited number leaves them inaccessible to a large number of people. Passing on the benefit of plunging international oil prices, the government has announced Rs15 per litre reduction in the prices of petrol, diesel and kerosene. The government has assured the people of more reductions in coming weeks.

The payment of electricity and gas bills can also be made in three installments. The facility would be limited to those with monthly electricity consumption of less than 300 units and less than Rs2,000 per month of gas bills. The facility covers about 75pc of power consumers and 81pc of gas consumers.

The prime minister said Rs50b had been set aside to provide financial support to medical staff and to hire more staff. In addition, taxes on imported essential food items, like pulses, have also been waived or cut. An additional amount of Rs25b has been given to the National Disaster Management Authority to beef up medical and rescue equipment, like testing kits and ventilators. About Rs100b would be set aside for a fund aimed to make arrangements for future emergencies.

The government calls it an “unprecedented package” because it believes it would not only mitigate the suffering of the people in hard times, but also create job opportunities and boost the economy. It is despite the fact Pakistan still has one of the highest interest rates in the world while other countries have significantly reduces it to offset the virus effects. According to the government, the key objective of the package was to overcome the challenge caused by the coronavirus, make health and food facilities available to the people and address cash problems of the people and the businesses despite limited resources. The government also reminded critics that out of Rs4t resources, it had only Rs1.6t at its disposal after transferring provincial shares to take care of Rs5t loans in two years.

The government may financial constraints but it would have come up with a better plan. The reduction in fuel prices will not benefit the people in the lockdown. They cannot benefit from the relief sitting home after travel restrictions.

Public gatherings are banned, schools are closed and all shops other than those selling groceries or medicines have been shut down in the whole country. For daily wagers, it is already a curfew and they do not know for how long it will last. With the current level of restrictions, work has already dried up for people who have to work daily to eke out a living. Moreover, a Rs 3,000 subsistence monthly allowance announced for daily-wage workers is a joke. The government has announced the allowance for three months. The first question is: whether the meager amount will reach the deserving people or not? Then, the government must also have devised a strategy for the poor families to survive with Rs3,000 for a month. It could have been at least Rs20,000 a month for each family for three months. The government could have provided loans instead of a meagre subsistence allowance for workers, to be returned in instalments.

Despite the loopholes, it is a good effort under the circumstances. The relief package, reduction in fuel prices and interest rates are appreciable. The economy is not strong enough to support the people in a better way. The government cannot alone cope with the situation. It is time the rich join in and support the government efforts to alleviate the suffering of the vulnerable segments of society.