KARACHI, July 22: The State Bank Governor, Dr Ishrat Hussain is of the view that government’s decision to import commodities “is not timely”. He was asked to comment on government’s strategy to counter the rising prices of wheat and other commodities by allowing the duty-free import.
In an interview with Dawn early this week, the State Bank Governor spoke on the impact of the monetary overhang, the tempo of the economic growth and its sustainability and other related issues.
He expressed the hope that the government would strengthen and activate the Monopoly Control Authority to counter the role of the business cartels and the syndicates in cement, sugar and other commodities.
For last more than two years, the State Bank in its annual and quarterly reports has been drawing government’s attention towards the market where speculators are taking over the control. At least in three reports, the State Bank addressed the issue of speculative booking of motor cars. The auto assemblers booked orders for the cars, inordinately delayed the delivery, and in process amassed huge funds from the consumers. So was the case with the commodity traders who reaped rich benefits from low interest rates and indulged in speculative trading.
Dr Ishrat strongly defended his monetary policy during last three years, which he said, had stimulated economic growth and facilitated import of machinery and equipment worth $14 billion besides putting into productive operation the unutilised production capacities of the industry. “This machinery has been imported in last four years and much of it has completed gestation period and is about to commence production,” he said.
He was confident that if the growth tempo was maintained in the current fiscal year, the inflationary pressures were bound to mellow down and people would get some relief. “There will be a marked reduction in poverty by 2010 if the economic growth is maintained at 6 per cent plus,” he said.
He disclosed that the State Bank’s next annual report for 04-05, due sometimes in September, would incorporate chapters on the provincial economies. “The World Bank is giving reports on the state of economy in Punjab and Sindh sometimes next month,” Dr Ishrat said. “The next annual report will offer analysis and comments on these reports.”
There have been a qualitative change in the State Bank’s annual and the quarterly reports under Dr Ishrat’s tenure. The analysis is far more incisive and informative and reports cover many aspects of the economy, which hitherto were never touched.
For example, the State Bank gave a detailed analysis of the defence related debt about two years ago. This area, for unknown reasons remained a forbidden territory for every institution of the country.
In other reports during last more than four years, the State Bank touched upon the social sector issues in-depth and in detail, particularly education, unemployment, inflation and its implications on the economy and on other matters.
He agreed that there is a need to increase the administrative and fiscal capacities of the provinces to ensure quick delivery of services to the public at large. “What’s the fun in federal government taking up health and education projects in the provinces,” he said.
Dr Ishrat defended budgetary measure of levying a nominal tax on drawing cash of over Rs25,000 from the bank accounts. “We want to discourage cash transactions,” he explained and secondly he added that this levy would not affect low-income group. “Those who draw in excess of Rs25,000 through a single cheque are obviously rich people. Thirdly, the tax is adjustable at the time of filing return.
