THE subsidy plans on essential items’ and appointments of magistrate in all the districts are planned to curb the skyrocketing trend in prices. These magistrates have been empowered to punish profiteers and hoarders for which the relevant law has been amended.

The Adviser to the Prime Minister on Finance, Dr Salman Shah has reiterated the government will not tolerate undue price hike as it causes hardship to people. Prices of pulses and sugar will be especially monitored, he has added. One has to wait and see the outcome.

But the question arises: what the government had been doing when the rates of pulses and sugar had been skyrocketing for the last one year?

The Rs2.5 billion subsidy on imported pulses and the appointment of magistrates seems to a part of election process, otherwise the government is hardly bothered about consumers and the rising cost of living,

Price magistrates in all the districts is a new concept in the policy shifts introduced by the government. Before devolution of power at the district level, five years back, district magistrates, already loaded with other pressing issues, had also been assigned to control prices. To some extent, they were successful in their efforts because of their frequent market visits with police officials in the area.

After the devolution of powers, the City Government faced the daunting task of price hike, especially during Ramazan. But the city government officials, while showing enthusiasm in the first week of the holy month, usually lost their fervour, leaving consumers at the mercy of profiteers.

The City Government officials attribute their failure in checking the profiteering to the lack of magisterial powers. With 18 Deputy District Officials (DDOs), revenue, coupled with 70 officials including town nazims, town municipal officials etc were not enough to handle the situation, especially in Karachi with a population of 15 million.

Magisterial powers could not be invested to the DDOs as the Law Ministry (Sindh) insisted that only persons with a LLB degree could be made area magistrates. Under this situation only 4-5 DDOs could meet the requirement.

The City Government has been seeking magisterial powers for its officials for the whole year rather only for Ramazan and this request had been turned down by the provincial government.

Complaint camps had been set up in Ramazan but most of the camps were staffed by officials who performed their responsibility half-heartedly. Even the police did not cooperate with the officials who were monitoring prices.

In the light of above, it is not clear if any additional magistrates will be appointed to back up those monitoring the prices. However much would depend on salary of price magistrates and additional magistrates. Under the circumstances, the profit controlling measure may turn into a routine exercise as the market-men know how to influence the officials.

Raeesuddin Paracha, a former Executive District Officer (EDO), Enterprise and Investment Promotion, City government and former District Magistrate, who had conducted the price control exercise for few years, believes that appointing price magistrates is a good decision but the whole exercise may prove to a failure, especially in Karachi, if sufficient numbers of these magistrates are not made available.

“The price magistrate should have at least 100 additional magistrates as his assistants to achieve the desired results on sensitive price hike issue,” he says adding that Karachi has 18 towns with huge population”.

There is a need for heavy penalties for the profiteers and hoarders rather than few hundred rupees. The government must invest autonomous powers to Price Magistrate and his assistants with good salary and perks in order to achieve objectives, he says.

Controlling prices have remained a very difficult task for the city government. Sugar does not fall in the domain of the city government as it is a federal government subject.

Lack of spade work in collecting data regarding import, crop estimates and stocks in the market, etc have been the biggest drawback for the price regulators. They launched the crusade against retailers without monitoring the wholesalers and producers who at times were responsible for pushing up the rates. The government had never checked the supply side of the products.

The government is coming out with subsidy on commercial imports of essential goods and also on local production but it has never checked whether the benefits were really been passed on to the consumers. The government has given Rs50 billion subsidy on wheat in the last few years but its price has not come down.

Before 1980, there was an Agriculture Marketing Department which used to conduct crop monitoring and giving reason of decline in crop output to the concerned ministry. However, it might be working today but it seems that the government does not act on its findings. The government should inform the consumers about the crop situation and closely monitor the price rise.

The government should also intervene and monitor the arrival of imported commodities and its impact on the markets rather than leaving the consumers at the mercy of market forces. Powerful cartels exist in sugar, cement, wheat and other essential commodities. Then there are also special interests.

Sugar price hike is the glaring example in which NAB has suspended its enquiry and taken the case back on pressure from the legislators and ministers as they own many sugar mills. In milk, powerful dairy farmers control the business and have never been questioned or penalised for any price hike.

Besides, some consumer bodies or NGOs have emerged but their activities have been restricted to seminars in posh hotels.

Utility stores: A difference of Rs9.50 per kg in sugar between open market and utility stores and long queues of customers have brought to limelight the existence of 1,100 regular utility stores and sales points, being operated by Utility Stores Corporation (USC).

There has been no let up in consumers’ rush for sugar during the last four months despite increase in monthly quota to 32,000 from 11,000 tons in January 2006.

The government is now planning to expand its network of utility stores in Tehsils. As many as 182 tehsils out of 380 tehsils do not have utility stores outlets.

In budget 2006-2007 announcement, the government has reduced the pulses rate by Rs10 per kg as compared to pre-budget rate after providing subsidy.

In pulses, the gap between retail and utility stores’ price at Rs7-12 per kg may shrink as the government has announced to provide subsidy to commercial importers for pulses imports.

Gram pulse, mash (washed), moong (washed) and masur (washed) are now available at Rs30, Rs58, Rs53 and Rs31 per kg as compared to pre-budget rate of Rs42, Rs70, Rs65 and Rs37 per kg.

In the local markets, gram pulse, mash, moong and masur are available at Rs38-40, Rs68-72, Rs60 and Rs 36 per kg respectively.

Retailers claim that only five to 10 per cent of 160 million population benefit from the utility stores. They also allege that the quality of goods like pulses and sugar cannot be compared with quality in retail markets.

Coming to sugar crisis, in some areas, consumers are being asked to make first Rs70 shopping in order to become eligible for two kg sugar bag. For four kg sugar bag, a buyer has to make initial shopping of goods worth Rs150.

In other areas, consumer can get two kg bag of sugar after shopping of Rs50 and four kg bag for Rs100 shopping. Many people return empty handed from many stores when the officials disclose that the stock is finished.

There are also reports that some shopkeepers have hired volunteers, who make several rounds of various utility stores to build up stocks and then sell these to shopkeepers at the commission.

In many cases, it was seen that a truck, carrying sugar, arrived at a store and in a few minutes, the entire lot had been sold out, especially in the district Central where caterers are also active in buying from USCs.

Buyers of sugar at the utility stores are found selling the commodity to retailers, hoteliers, small restaurants etc at a profit margin of Rs5 per kg. .

A senior official of the USC claims as many as 40 per cent population now buy essential items from the utility stores all over the country.

He says the utility stores may not witness chaos like situation in pulses because supplies from the USC have been tripled and utility stores discourage bulk shopping. Pulses are not being purchased in bulk quantities by the consumers as compared to sugar.

Rations cards were in use decades back, needs to be re-introduced to control double purchasing in which the number of family members must be mentioned. The stores should have some registration or record of buyers’ purchasing.