KARACHI, March 6: Is the government hostage to the profiteers, hoarders and big business? Looking at the plight of the consumers in the markets and the helplessness of the governments - federal, provincial and local - in dealing with the profiteers , one just cannot help raise this question.

The government offered 25 per cent relief on excise duty on cement in the current fiscal year's budget. The prices of cement went up by almost 18 per cent because the manufacturers that include state sector formed a cartel. This cartel controls production, assigns every single mill to produce cement to a certain limit, and that too for export to Afghanistan. No wonder the cement sector in the stock exchange is poised to distribute handsome dividends. The cement sector contributed substantially in raising the Karachi Stock Exchange trading to touch 4,900 mark on Friday.

But what about those people who expected a lot from government's programme of boosting construction. What about "apna ghar", "aasan ghar" and a host of other such schemes that the House Building Finance Corporation and banks launched with much fanfare to encourage people to construct houses.

Recently in a speech State Bank Governor Dr Ishrat Hussain admitted that bank credit for construction dropped by almost 50 per cent during the last quarter of 2003. It came down from Rs8 billion in June 2003 to Rs4.3 billion in December 2003. How would one explain this phenomenon?

Cement barons are now seeking government subsidy on their export business. They have learnt lessons from their cousins - the sugar tycoons. Sugar tycoons literally forced the government to export 100,000 tons of sugar at a subsidy cost of almost Rs600 million during 2003. The export of sugar pushed up sugar prices in the domestic market. The TCP was forced again to buy 100,000 tons of sugar to clear the inventory. Sugar millers earned from their exports as well as from the domestic market. Now again, both the cement manufacturers and sugar millers are lobbying for a generous rebate on export at the cost of taxpayers' money.

Auto trade is an interesting episode in the economic history of Pakistan as filthy rich automobile tycoons are pitched against reasonably rich consumers. A task force to recommend import of reconditioned and new cars was formed more than eight months ago. Its report was delivered recently to the prime minister, and another committee has been formed to recommend how the suggestions of this task force are to be implemented. The State Bank of Pakistan in its two reports have explained how the auto assemblers make money from the advance payment and holding delivery for more than a year. Their deletion programme still remains behind the schedule.

"There are no bulls and bears in Pakistan's market, but wolves have come to stay here who are tearing apart the helpless consumer" is a sarcastic comment of a grade-17 government employee who finds it impossible to feed his family - a wife and two children - with his monthly salary of less than Rs14,000. He justifies his extra income that he earns by way of using the clout of his office. Employees in private offices are not that fortunate. They are more hard pressed as they really live on a fixed income.

The governments at every level - federal, provincial and local - have been found wanting in dealing with this unprecedented price hike phenomenon, which is showing signs of gradually alarming proportions in near future. These governments at every level are instead found to be callous, indifferent, ineffective and completely helpless in dealing with the increase in prices of wheat flour, mutton, milk and curd, cement, cars, drugs and what not.

Since Ramazan, the prices of wheat flour shot up to Rs14 a kg, while the price of a 16-kg ghee tin crossed the Rs1,000 barrier, that of mutton touched Rs200, beef Rs130 per kg. Vegetables were never so expensive in the city as they were during Ramazan and after. Imagine, tomato was sold at Rs80 per kg during Ramazan in Karachi. Flour price is now Rs16 a kg after having touched peak of Rs18 per kg about a week ago.

What were the reasons for this unusual price hike in the city? Located far away from wheat growing areas with a market of 14 million, Karachi is the ideal hunting ground for all the adventurers to make easy and quick money.

What was the role of governments at three levels - the federal, the provincial and the local - in this game of flour trade.

The federal government and the State Bank had worked over time during the last three years to bring down banks rates. Banks' credits are available at dirt cheap rate. Who did benefit from the falling bank rates? The federal government swapped its expensive loans with cheap loans. The big corporations are showing fabulous profits. The traders too are in the rat race and benefiting from the cheap bank loans.

The provincial government provided millers and traders with wheat at Rs850 for a 100 kg bag, which was stocked and released in bits to secure a price of Rs1,200 for the same bag.

The local government wants magisterial power, the ultimate solution to control this malady. It does not have capacity to monitor the movement of wheat and food grains that it should do under the Food Control Act. Flour mills should be asked to print retail prices and declare standardized content of their produce on their bags.