KARACHI, May 30: President General Pervez Musharraf last Friday promised before the media in Islamabad to provide subsidy relief in the next budget to the general public groaning under the impact of a phenomenal price hike on all essential items.
But on Tuesday, the Economic Coordination Committee of the cabinet, probably the last pre-budget presentation, expressed satisfaction over ‘price stabilisation’, as only 0.14 per cent rise in prices was noted in the sensitive price index.
“The satisfaction of the ECC was on the price movement during the last two weeks,” Dr Salman Shah, Prime Minister’s Adviser on Finance, replied to a query on telephone from Islamabad on Tuesday evening when asked why President Musharraf should announce a subsidy in the next budget when price stabilisation is satisfactory.
“The president’s announcement of subsidy on essential items is after noticing a long-term impact of prices,” the adviser said, adding that prices of pulses and food grains are hurting the public and hence the promise of subsidy relief.
“Wait for the budget,” Dr Salman replied when asked if he could elaborate on the mechanism of subsidy provision in the budget to benefit the consumers. This question was asked because the current fiscal year’s budget stipulates Rs72.33 billion subsidy. This includes Rs4.58 billion subsidy on wheat.
But in final counts at the end of the day, this subsidy amount is expected to exceed Rs100 billion because in the current fiscal year, the government has found duty-free import with some subsidy the easiest way to meet shortages of pulses, wheat, sugar, vegetables, cement and many other items.
For obvious reasons, the government does not have moral courage to tell people to face these shortages. There is none in the government to be a role model of self denial in contingency. There is no vision in the government to plan for meeting these shortages by augmenting domestic production and improving the supply and distribution system so that essential items reach every nook and corner.
And mind it in addition to this federal subsidy, the provincial governments too offer subsidy on wheat trade. But this subsidy is neither reaching consumers nor benefiting the growers. The Supreme Court on May 23 directed the Balochistan food department to explore ways to lower flour prices in the province after observing that the government subsidy on flour was not reaching the common man.
According to the report, the Supreme Court bench also considered a report from the provincial ombudsman that confirmed misdemeanours in the Balochistan food department were depriving the people of benefits of the subsidy.
“The province is getting subsidy at the rate of Rs190 per 100 kg, but rates of flour bags were not different from those in other provinces. There is an error in the mechanism which is hampering the flow of benefit to the consumers,” observed the chief justice.
This case relates to a complaint on which the chief justice took a suo motu notice. According to the complaint, there was a shortage of wheat flour in the province and it was being sold at a higher price than other essentials. It was alleged that millers in Balochistan were overcharging for flour despite getting the prescribed quota of wheat from the government stocks. Wheat is also being smuggled to Afghanistan.
On May 23, the counsel for the flour mills owners, Justice (retd) Tariq Mahmood, informed the court that the entire amount of subsidy was being spent on the transportation.
The Water and Power Development Authority claims the biggest chunk of about Rs24 billion from the government’s subsidy budget followed by KESC that gets about Rs8 billion subsidy.
Dr Salman Shah insists that subsidy on power has given some relief to the consumers, but there is a general complaint that Wapda and KESC bills are inflated. Many growers in Sindh and Balochistan to whom the government provided subsidy about three years ago complain that they do not get any assistance.
In the last five years or so, the federal and provincial governments are said to have offered more than Rs50 billionn as subsidy on wheat. The wheat flour price remains between Rs13 and Rs16 a kg and so is the case with prices of bread and bakery products.
The real beneficiaries of government subsidies are traders, millers, brokers, smugglers and the corrupt food bureaucracy in all the four provinces. How subsidy is being abused is best illustrated by the number of flour mills which thrive on subsidised wheat from the government stocks. Afghanistan and Central Asian republics are the markets where wheat from Pakistan has been smuggled as the cushion for transportation cost comes from the government subsidy. This holds true for subsidy being offered on other goods and services.
