In the absence of a plausible and visionary policy, Pakistan’s economic predicament is a singular challenge facing the PTI led government. There is a persistent rise in food inflation which is causing growing anger amongst the general public. Government blames the Covid -19 deadly global pandemic’s impact on global supply chains which in turn has affected commodity products. However, if we are to run with this argument, policy makers do not take into account that Pakistan remains a country that prides itself on agriculture. Pakistan also had much shorter and looser Covid lock downs than several other countries. Therefore domestic agriculture output should have compensated for international supply chain issues but unfortunately due to flawed policies and food stock management, this has not been the case. Skyrocketing inflation is literally crushing the middle income group and low income strata as unlike the elite class their budget can no longer afford basic everyday goods and necessities. In the last three years, inflation has increased by an aggregate of more than a third, with a historic 9.2 percent recorded for the month of October 2021. This number is influenced by the crashing rupee, rising global prices and a significant increase in domestic food prices.
Middle-class growth is rightly said to provide the socio-economic backbone of any country. It is hard to deny the importance of seeing more people join the segment of a country’s middle income population which is decently educated and engaged in professional and business occupations. The middle class in Pakistan can loosely be defined as the section of society that comprises households with a minimum monthly income of Rs 50,000. This middle class is currently confronting challenges due to elite-led growth, which has increased concentration of wealth in the hands of a few. Against the background of rising inflation, the gap and income expenditure for the lower and middle class has augmented. Majority of our bread winning population are either daily wage earners or fixed income salaried individuals and have been badly affected by the COVID-19 pandemic induced economic downturn with businesses shutting, reduced labor and layoffs limiting their purchasing power. People have dried up their savings during periods of lock down and are trapped under a mountain of debt. To make matters worse, persistent hikes in food inflation have left the public disillusioned, frustrated and angry. People are failing to support their families and maintain their lifestyle. The fortunate ones who still have jobs are pressured to live paycheck to paycheck, compelled to further cut their essential household expenditures on education and health as they struggle to get through the month. The prevailing price hike in the country has broken the record of the last 70 years. According to the Federal Bureau of Statistics, in the last three years, electricity tariff has risen by 57%, petroleum products have become dearer by 49%, rate of edible oil has soared 133%, sugar 83%, 20 kg flour bag 52%, chicken 60% and beef 48%. Likewise, prices of milk, lentils and medicines have risen sharply. The value of the dollar against the rupee has risen from Rs 121 to Rs 173. The government has not kept its resolve to control prices of essential kitchen items by moving administrative machinery against hoarders with no concrete and effective strategy to address the issue and seems as a helpless bystander. The alarmingly rising price trend of staple food items are attributed to increased global commodity prices, powerful agricultural mafias and industrial cartels who manipulate supply and demand to pocket profits. Another major component of food price inflation is agriculture which despite being the country’s backbone has not been treated as a priority by the government so far. The rising cost of gas and electricity over the last three years tied to a 2021 IMF aid package has hiked fuel prices and has led to costly fertilizer and seeds. When inflation, unemployment, debt to GDP ratio, hefty trade imbalance and heavy dependence on foreign loans are accepted as a fact, the outcome is bound to be disastrous. On top of that when ministers and professionals like the State Bank governor or Finance Minister rule out any economic quandary and insist that the high flying dollar benefits overseas Pakistanis, people like you and I from humble backgrounds can only regret their ignorance and indifference. People in the corridors of power need to realize that it is the middle class, PTI’s biggest vote bank that is not just shrinking but has a real danger of being wiped out. Financial statistics of macroeconomic indicators such as narrowing current account deficit, increase in exports and foreign remittances, however much appreciative they may be, hold little meaning to the masses. The main barometer to gauge government performance is availability of essential food items at affordable prices. Government Ministers should quit blaming their predecessors by attributing this inflation to ‘wrong policies’ of the past. Containing food inflation is also not a provincial subject alone .PTI is a coalition partner in one and controls two provinces, particularly Punjab, the country’s food basket. To the common man, especially the shrinking middle income groups, sifting facts from fiction in the haze of jargon and big numbers is hard. They can tell though if a budget helps or hurts them. The test is simple: the impact on their pockets. According to The Pakistan Economic Survey 2020-21 suggest some 50 percent of middle-class families have been pushed to the edge amidst high inflation and falling incomes. The claim of the government that only 0.2 million were pushed out of the job market owing to the pandemic is not convincing. Concerns of the middle class on jobs, falling incomes and price hikes are not getting sufficient attention. The increase in petrol price has accelerated inflation and has further strained family budgets. Kitchen, transport, utilities and education spending has increased. Rent, income tax, health and miscellaneous spending have not changed, but personal savings have shrunk. The outgoing year of vanishing jobs, falling incomes and price hikes has taken its toll, especially the middle class. They want the government to nudge employers to create jobs and increase salaries in these nerve-shattering times.
It is high time for the government after having been in power for around two and a half years to tame this mounting inflation by devising policies aimed at enhancing exports, curtailing imports, controlling expenditures, eradicate corruption and enhancing the tax base. Stringent measures need to be taken to control an artificial shortage of essential food items . Prices of basic commodities must be regulated and subsidized. There ought to be a crackdown on the black market to ensure consumers are not being exploited. Tax collection must be enhanced from the existing Rs 4.7 trillion by recovering amounts from the powerful rich elite, minting money from big businesses in the country. The bailout package announced by Prime Minister, Imran Khan, is not enough to prevent the aggravating economic crisis and is hardly sufficient to provide temporary relief. The opposition parties also need to provide input and offer expertise to control the excruciating price hike as a shadow government instead of mere protests and demonstrations. Given that Pakistan is now importing staple food items such as wheat, sugar and pulses, it is deeply concerning that the default answer of governmental authorities is “not my fault” rather than “we will fix it”. The government has failed to act on past promises to manage the prices of essential food items, such as the unfilled assurance that duties and taxes on cooking oil would be cut soon. The masses are now running out of patience over the government’s failure to reform the country under their 2018 election slogan of creating a ‘ Naya Pakistan’ . It is time for the ruling party to consider the economic dilemma in earnest and implement steps to address the lower and middle income segment’s economic woes. ‘Naya Pakistan’ should not come at the cost of the common man !
