June 05, 2006	Monday	Jumadi-ul-Awwal 8, 1427

The government seems to be finally convinced that necessary legal measures are needed to halt the sky-rocketing prices, hurting the people badly. With the approaching 2007 elections, political expediency demands a strict control on prices. There is a growing realization in the ruling PML that price hikes will not help it win the next elections, particularly, if they are fair and free, for which both domestic and external pressures are mounting.

It is in that backdrop that the Monopoly Control Authority (MCA), to be transformed into the Competition Commission from the next financial year, will be provided with the authority to tackle effectively cartels, hoardings and profiteering.

The need for such a strong and effective competition commission, replacing the MCA was agreed in a recent meeting between the president and the prime minister. The monopoly law had has become out-dated in a paradigm shift in policies in favour of privatization, de-regularisation and liberalisation. The updated competition law would also conform to the needs of a competitive emerging market.

It was also agreed that former chairman of the Security Exchange Commission (SECP) Khalid Mirza, now with IFC, an affiliate of the World Bank, should be brought back and made the head of the Authority. His name was reportedly proposed first at the 2-day Pakistan Development Forum (PDF) meeting. He is a former SECP chairman and much of the capital market reforms were introduced during his tenure.

Interestingly enough, the president, the prime minister, PML President Chaudhry Shujaat Hussain and a number of other PML leaders have started conceding that the common man is hit hard by the price hike and that he should be given some relief in the new budget.

The Prime Minister’s Advisor on Finance, Dr Salman Shah had told newsmen at Islamabad last week that a decision had been taken to have legal measures against the profiteers and hoarders.

Till recently, the government has been saying that the price hike was mainly an issue of supply and demand. The policy-makers felt that investors—both local and foreign, will stop making investment if the government tried to regulate or control the prices. They used to say that it was a free market mechanism and any effort aimed at controlling the prices by administrative measures will be counter-productive.

Nevertheless, there is no official word that what kind of measures are being taken in the new budget to offset or regulate the prices, which the officials claim, is primarily due to increasing international oil prices or rise in domestic demand.

According to a senior official of the ministry of finance, the Competition Commission will be entrusted with the task of formulating a policy to ensure that prices of essential items do not increase without rhyme or reason. For example, he said items like sugar, flour, cement, pulses, fruits and vegetable etc. will be strictly monitored by the commission beside looking after various other tasks to be assigned by the government.

“What would be the exact mechanism to regulate prices and actions against profiteers and hoarders could only be known in the new budget”, the official said, adding that the State Minister of Finance Omar Ayub will deal with the issue in his budget speech.

The officials are of the view that prices, especially that of daily use, are raised without any reason and without any fear of accountability.

“You are right the issue of increasing prices has caused huge embarrassment to the government and forced it to do some thing about it if at all it wants to be in the business of politics”, the official said.

He was confident that the budget for 2006-07 will provide salary increases and subsidy on various items.

The government which pays over Rs80 billion subsidy, mainly to Wapda, may withdraw some of these subsidies and transfer them to more deserving poor people.

Various other proposals including the revival of the old system of ration cards still prevalent in India or the provision of some kind of an unemployment allowance as in India, were also discussed in official meetings.

The new Minister for Information Mohammad Ali Durrani is believed to have pleaded before the government and ruling party leadership to address issues of concern to the common man.

But some officials of the Planning Commission are not very hopeful that the proposed Competition Commission will ensure “fair prices”. They say a whole lot of issues pertaining to inflation, mismanagement and ever growing corruption in the government departments are needed to be checked to provide relief to the people who are sick of the price hike.

“The government seriously needs to look into the issue of prices which have started hurting those people who are even earning Rs40,000 and 50,000 per month”, said an official of the Planning Commission.

He was of the view that it was all an eye wash and that as soon as the new budget is presented and passed by the National Assembly, everybody will forget that price hike is any important issue or the common man should be given any relief.

“There is no commitment right from top to bottom, therefore, I do not see any improvement in things”, the disgruntled official said. He said legislators are more interested in increasing their salaries and perks rather than showing any concern for the common man. Is it not a shame that those who are already rich are seeking revision in their salaries” he asked.