ISLAMABAD: The government appears to have come under increasing pressure over the issue of price hike as Prime Minister Imran Khan on Monday ordered creation of a special cell for integrated planning on demand and supply of essential commodities to control their prices.
Soon after the prime minister presided over a meeting of his economic managers, his Adviser on Finance Dr Abdul Hafeez Shaikh, accompanied by Minister for Economic Affairs Hammad Azhar, Finance Secretary Naveed Kamran, Federal Board of Revenue (FBR) chairman Shabbar Zaidi and Special Finance Secretary Omar Hameed Khan, appeared at a news conference to defend the government policies and explain steps they could or have been taking on the pricing front.
More than their explanations, they faced question after question about the increase in prices of various kitchen items, particularly vegetables and fruits, and the policies that trigger inflation — from high policy and interest rates to hoarding, black marketing and short supplies. Some questions also pertained to record prices of tomato going beyond Rs300 per kg in some cases, besides sugar, wheat flour, onions and potatoes, to name a few.
Dr Shaikh said the government was not taking any measure that led to price hike and claimed credit for releasing wheat stocks in the market and for not borrowing from the State Bank or zero currency printing over the past four months.
PM’s economic aides face queries about increase in prices of vegetables and fruits, high policy rate, black marketing and short supplies
He was reminded by a journalist that the record high policy rate of the central bank, peaking interest rates and currency depreciation had played the central role and asked as to why the government was offering discounts on interest rates to selected areas instead of reducing the policy rate?
Dr Shaikh said the discount rate setting was the role of an independent monetary policy committee that comprised renowned independent economists, adding that there were also some people who had invested their lifetime savings in banks, like pensioners, with a hope of high returns.
The PM’s adviser said the government was now focusing on reducing prices. “Who do you think would be worried today more than the prime minister who has been given votes by the people?” he said, adding that PM Khan was holding meeting after meeting to address the problem and asking the relevant quarters to do the needful.
He said the government was taking four-five instruments to control prices. It took steps to improve supplies when prices went up, he said, recalling the government had released 650,000 tonnes of wheat from public sector stocks when flour prices started going up and the move had a positive impact in the market.
Also, he said, there were certain things that the provincial governments should take care of like they should make sure that the prices of produce did not go up as much as these were between the farm and the market. Then there were some items that were being smuggled out of borders to Afghanistan, Central Asian Republics and Iran and there was a need for an effective mechanism to stop that, he added.
In the heat of arguments after the presser, a questioner asked Dr Shaikh why he was not moved by tomato being sold for Rs300 and onion Rs120 per kg.
He retorted: “From where [you] are quoting these prices, where the prices [are] increasing? The tomato price in the Karachi vegetable [market is] Rs17 per kg.”
According to an official statement, the meeting chaired by the prime minister was informed that effective administrative and policy measures were being taken to control sugar prices and special focus was on discouraging hoarding and profiteering. It was told that provision of Rs6 billion to the Utility Stores Corporation approved by the prime minister would go a long way in significantly reducing the prices of essential commodities. The prime minister was informed that sugar stocks availability was satisfactory in the market.
The adviser on finance told the prime minister that the government was now focusing on providing every possible relief to the people as a top priority along with further strengthening economic stability and extending maximum facilitations and ease of doing business to the investors and business class.
The prime minister directed that the special cell for formulation of integrated planning on demand and supply of essential items should work under the national food security and research ministry which should suggest measures for comprehensive administrative and planning on demand and supply to help keep prices under control.
Published in Dawn, November 12th, 2019