DATELINE ISLAMABAD: Fighting inflation with good governance

THE coalition government of 2002-2007 would prefer to be remembered, especially in next year’s general elections, for having engineered high economic growth rates which have earned it acclaim from some sectors locally and abroad. But unless there is a sharp fall in the Consumer Price Index by next year, most people in Pakistan are likely to remember the current government as one that could not rein in the surging consumer prices.

The official inflation figure for fiscal year 2005-2006 (July to April) is eight per cent, slightly down from the last fiscal year’s 9.3 per cent (July 2004- April 2005). But the general public doesn’t feel that inflation has gone down at all. According to some private analysts, inflation has touched the double digit in the market.

For the ordinary man in the street, inflation during the past year seemed much more than even 10 per cent, judging by the jump in sugar prices from about Rs24 to over Rs40 per kg (a price increase of over 66 per cent). No matter what the official inflation statistics, the general public feels that the prices of food items like meat, wheat, pulses and vegetables, house rent, fuel and lighting, and transport and communication charges have been rising continuously for the past two to three years.

Whether measures in the 2006-2007 proposed budget would help to bring down inflation to the low levels of the early 2000s - below five per cent - well before the next general elections in 2007 remains to be seen. As the situation is today, the prospects of the government being able to maintain a better balancing act between economic growth and tolerable inflation in the coming year do not seem very bright.

Some of the relief measures provided for in the proposed budget are a Rs109 billion package entailing a 15 per cent increase in the wages of government workers, a 15-20 per cent rise in pension payments, and a 33 per cent increase in the minimum wage from Rs3,000 to Rs4,000. Whether these measures will actually help the general public to beat inflation or whether it will merely contribute to a further inflation spiral remains to be seen.

The view of some foreign experts is that inflation numbers will remain stubbornly high in the fiscal year 2006-2007 under the proposed budget. According to Standard and Poor for instance, the proposed budget’s “expansionary” slant is likely to further strengthen domestic demand and sustain the pressure on inflation.

The anti-inflationary measures proposed in the 2006-2007 budget include import subsidies to ensure the supply of essential food items, more utility stores to ensure the supply of essential items at lower prices, and close monitoring of the price situation to keep a watch on the supply and demand conditions. But these price stabilisation measures are exactly the same as those mentioned in the past two Economic Surveys 2003-2004 and 2004-2005, and we have seen how effective these have been in controlling inflation during the past two years!

Official statistics themselves show that inflation has more than doubled during the past two years as compared to the early 2000s. The Consumer Price Index for the period 1999-2003 had hovered around 3-4 per cent (3.58 per cent in 1999-2000; 4.41 per cent in 2000-2001; 3.54 per cent in 2001-2002; and 3.10 per cent in 2002-2003).

In 2003-2004 it went up by one-and-a-half per cent to 4.57 per cent and then suddenly shot up to over nine per cent in 2004- 2005. In fact, this trend of high inflation began in late 2003 with the rise in wheat prices and since then, consumer prices in general have been sky-rocketing.

One reason for our apparent inability to bring down inflation significantly so far seems to lie in our reluctance to zero in on the real causes and remove them. The government prefers to put the blame for inflation on high international prices of commodities, but many analysts believe that the recent trend of high inflation in the country has been fuelled in large part by practices such as hoarding, profiteering, smuggling, speculation, the power being enjoyed by the monopolies and cartels in the country, corruption and the problem of poor governance in general.

In the past three Economic Surveys, “mismanagement in wheat operations” (2005-2006), “mismanagement of wheat stocks” (2004- 2005) and “withholding of wheat supply by hoarders and speculators” (2003-2004) had been mentioned as a cause of the inflation but then no specific measures were proposed to stop these practices.

Similarly, in all the past three Economic Surveys, successive increases in the support price of wheat was mentioned as a key cause for the increase in the price of wheat which had contributed substantially to the rate of rise in food inflation. Despite this, the support price of wheat kept on increasing.

In the 2004-2005 Economic Survey, the “formation of producer cartels in key commodities such as sugar” was also blamed for the food inflation, these cartels having “led to a situation where consumers were denied the benefit of record levels of domestic production”. But again no measures were proposed to deal with this.

Worse still in the latest 2005-2006 Economic Survey, the sugar cartel factor in inflation was removed and instead, inflationary pressure building was blamed on the “decline in the size of sugarcane crop resulting in relatively lesser production of sugar within the country as well as significant rise in international prices of sugar owing to diversion of large portion of sugarcane into ethanol by the world’s largest producer, Brazil”.

No one is saying that we shouldn’t encourage businesses and businessmen, for they help to generate economic growth, but these should not be encouraged at whatever cost. Certainly not at the cost of promoting unhealthy business practices like hoarding and profiteering which in turn contribute to inflation and adversely affect the purchasing power of the general public.

We may not be able to do much about international commodity price increases, but we can certainly reduce the impact of these “exogenous shocks” on local consumer prices by containing indigenous inflation-contributing business actions like speculative hoarding and profiteering, smuggling, monopolistic tendencies and corruption.

For this, we need a government that practices good- governance in economics, a government that deals with inflation as a permanent constant battle and endeavours to keep a check on it throughout while achieving the desired economic growth.

In search of a balanced picture

THERE were 16 per cent downtrodden Dalits in India at the last count. There were eight per cent adivasis or tribespeople. The Indian constitution guarantees 22 per cent job reservations for them in nearly all government departments. That quota was never filled up. Thus, between them the two communities share just two per cent of government jobs, a heavy component of these being lower division clerks and menial workers, including sweepers.

But the accompanying shouting melee led by India’s assorted privileged citizens projects a different picture. A myth was somehow created that government jobs were getting siphoned off by non-deserving Dalits who, it was claimed, were brought in through the backdoor of the system for narrow electoral advantages.

Now a fresh row has erupted over the extension of educational quotas by 27 per cent for India’s other socially disadvantaged Hindus, lumped together as the Other Backward Castes or OBCs, for admission to colleges and universities. A picture was presented in the media of a veritable upheaval about to happen, with images stolen from the student uprising in Europe in 1968, nothing less.

Doctors and engineers were tearing their shirts and threatening to commit suicide if the quotas were allowed for OBCs. It is another matter that most of these protesters comprise not just upper caste Hindus but those who exploited the educational system by not returning a fraction of the investment that went into their grooming. Many go abroad after studies and most of the rest go into private practice. A negligible dedicated few are involved with the unprofitable work of tending to the poor, particularly the rural poor.

No one denies that reservations in educational institutions for the OBCs is a populist political move and it may too end up paying lip service to a numerically powerful and electorally vocal group of Indians. The end result may not be too different from what became of the Dalits and the adivasis, as far as their job and educational quotas go. Yet there is a moral principle behind the argument for quotas. Who can genuinely deny that?

Caught in the middle of this caste struggle are India’s Muslims who may be united by their faith, but are also just as divided by their social origins. The upper caste Muslims, who dominate the clergy, have already been feeling the pinch as more and more lower caste faithful question their leadership. The poorer Muslims, dominated by low caste converts are beginning to eye a piece of India’s version of affirmative action as they too are entitled to get a share of the OBC quota largesse. The upper caste Muslims resent this and a quick survey of Delhi-based Jamia Milia Islamia, a university campus with a large presence of Muslims, showed most students there oppose quotas for OBC Muslims. This battle is set to intensify in the coming days. But don’t count on the media to follow it.

That Indian journalism is dominated by upper caste Hindus would not be a revelation to those who follow the Indian media closely. However, the fact that there is not even a single Dalit among the recognised or officially accredited journalists in the national media would shock even the most hard-boiled cynic observing India’s caste conflict.

A study carried out last week by the Media Study Group, involving the respected Centre for the Study of Developing Societies (CSDS), has thrown up the kind of detailed analysis that the Indian media has tried hard to keep covered. This is perhaps why all news channel and most newspapers did not bother to give any space to the ground-breaking survey.

This social profile of ‘key decision makers in the national media’ was collated by Anil Chamaria, Jitendra Kumar and Yogendra Yadav, all well-known researchers and seems to have been prompted by the way the media has projected the ongoing reservations issue.

The key findings of the survey are: India’s ‘national’ media lacks social diversity, it does not reflect the country’s social profile.

Hindu upper caste men dominate the media. They are about eight per cent of India’s population but among the key decision makers of the national media their share is as high as 71 per cent.

There is gender bias too within this bias: only 17 per cent of the key decision makers are women. Their representation is better in the English electronic media (32 per cent).

Media’s caste profile is equally unrepresentative. ‘Twice born’ Hindus or ‘dwijas’, comprising Brahmins, Kayasthas, Rajputs, Vaishyas and Khatris are about 16 per cent of India’s population, but they make up about 86 per cent among the key media decision makers. Brahmins including Bhumihars and Tyagis alone constitute 49 per cent of the key media personnel.

Dalits and adivasis, at the bottom of the caste heap, are conspicuous by their absence among the decision makers. Not even one of the 315 key decision makers belonged to the Scheduled Castes or the Scheduled Tribes.

The proportion of Hindu OBCs is abysmally low among the key decision makers in the national media: they constitute only four per cent of the team leaders compared to their population of around 40 per cent in the country.

Muslims are severely under-represented in the national media, the survey says. They make up three per cent among the key decision makers, compared to 13.4 per cent, their share in the country’s population.

Christians are proportionately represented mainly in the English media: their share being about four per cent compared to their population share of 2.3 per cent.

Social groups that suffer ‘double disadvantage’ are also nearly absent among the key decision makers: there are no women among the few OBC decision makers and negligible backwards among the Muslims and Christians.

These findings were based on a survey of the social background of 315 key decision makers from 37 ‘national’ media organisations, including up to 10 key decision makers from each organisation based in Delhi.

The survey was carried out by volunteers of Media Study Group between May 30 and June 3, 2006.

Indian and Pakistani journalists often accuse each other of being more faithful to their ruling establishments, at least on matters of foreign policy involving the two countries. Is it possible that this distortion would not be there if the social base of the media were a bit more representative of the people and not be an adjunct of their caste-dominated establishment? If the Indian media is blinkered by its caste composition that aligns well with the state, what is the Pakistani equivalent?

DO Indians suffer from inferiority complex of sorts as a people? President A. P. J. Abdul Kalam gave an indication last week that unnecessarily perhaps, but they do.

“I can assert without fear of contradiction that the quality of the Indian mind is equal to the quality of any Teutonic, Nordic or Anglo-Saxon mind,” he encouragingly told young defence scientists in Pune last week. “What we lack is perhaps driving force, which takes one anywhere. We have, I think, developed an inferiority complex. I think what is needed in India today is the destruction of that defeatist spirit....” What about the Chinese mind, sir? And the Babylonian and the Egyptian and the Mayan mind?

jawednaqvi@gmail.com

Chinese goods: a bane or boon?

Jaan Mohammad visits China at least twice a year, combs markets there, places orders for certain items, pays the money and moves on. He considers himself more of a tourist than a smuggler as he earns his living from other means – he has rented out several shops in a shopping mall. What he gets from these transactions, he piles for future tours. Now his ‘show-money’ bag has grown so bulky that it easily opens doors for him to various countries.

The system usually works perfectly well. Before leaving on his business-cum- pleasure trips, Jaan decides terms with traders in major cities on their needed items, prices and period of delivery. Now he knows well which items can be obtained in which market of which city of China. He may fly out of Karachi or may use the Khunjerab pass to enter the Chinese territory by bus. In China, he has to travel by train for days. If an item is not readily available, it is no problem. He gives the specification to the manufacturer or a sample to be copied. The manufacturer tells him how long it will take to produce the required quantity.

“You can literally order from a needle to an aircraft, and won’t be disappointed,” he tells Karachian. When he places the order, he pays the whole amount to the party and tells them where -– in Karachi, Lahore, Faisalabad, Rawalpindi, Peshawar or Abbottabad — he wants the goods delivered. No receipt, no legal proof but blind trust works. The suppliers do not use a single mode of transport. It may be a ship, bus, aeroplane and even mules that help smuggle goods into Pakistani markets. However, their main carriers are buses.

Jaan’s is a specialised field. It needs a bit of effort and time to bring in something that is rare. But many other items of daily use pour into Pakistan legally and illegally like flash floods. In cities like Karachi, these bulk supplies go out to retailers. You can see them in big shops, on the footpaths, being sold in buses and even at your doorstep. And see the variety of goods – cars, motorcycles, jewellery, leather goods, cloth, garments, furniture, stationery items, utensils, shaving kits, battery cells, electronic goods. Their quality may be low compared to their counterparts from Japan, Korea, Malaysia or even those locally made. But for the money they are available quality matters little. This has harmed many local industries. However, Pakistan is not alone whose industries suffer because of Chinese products.

In 1998, I bought a watch in a Tokyo market. It cost me around Rs3,100 in Pakistani currency. Later I discovered that the watch I had bought for being Japan made clearly stated it was made in China. To my amazement, I further learnt that most Japanese cannot afford goods made in their own country and, therefore, opt for Chinese ones. America is no less scared by the rising deluge of Chinese goods. Just see how the US media – its magazines, newspapers and TV channels – are busy demonising China. It is neither China’s ecological problem, nor its lack of western democracy that irks the US and European countries. It has certainly something to do with China’s growing economic power posing a challenge to the established giants.

Industrialists here have no reason to be alarmed by the availability of cheap Chinese goods. Why can’t they be content with lesser profits? The local people reeling from sky-high prices have every right to grab whatever comes within their reach. The Chinese goods are a boon for them. It is not only that these goods are economical, they have forced other countries also to lower their rates. If an item travels thousands of miles through anti-smuggling barriers and is available, for instance, for Rs10 in Karachi, why can’t we produce such an item at home and sell it at an equal price? Only if the industrialists decide to earn more by selling more! After all, the commodity that we have in abundance is our manpower. We export workforce to the Middle East and so many other countries. It is okay. The country badly needs foreign exchange. But there are many more jobless people who can be employed to fend off any threat from foreign manufacturers and can also contribute to the country’s economy. Where the government can help the industry, it must take measures to do so – give necessary concessions in taxes and utilities.

‘Date-palmisation’ of roads

In its attempt at ‘date-palmisation’ of city roads, the former city government replanted full-grown date palms. The success rate at that time was claimed to be 98 per cent, which may be an exaggeration.

The head count of the surviving trees is pretty difficult but some of them on Sharea Faisal are laden with fruit for a second season and are expected to mature in August.

The general perception about growing of trees on the roads is to provide a hedge against pollution and shelter for those who measure distances on foot, notably during the summer heat.

Some of the trees have already dried up while many others are decaying due to the absence of care and lack of watering.

Sher Shah Suri, who briefly interrupted the Mughal rule in the subcontinent and built the massive Grand Trunk road, had ordered that trees be planted on both sides of the road to provide shelter to the travellers. Sher Shah died and so did his rule, but he left a legacy that was followed by the rulers coming in his wake.

The new city government does not seem to oppose the idea of lining major roads with trees. It also needs to take care of the surviving ones and plant more trees.

— Karachian

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