NOTHING rocks a government like a price spiral in essential food items. But it is worth remembering that this is not the first, nor the last, such crisis under this government.
Around the same time last year, the prices of medicines also skyrocketed, due to a decision notified on the last day of 2018. In some cases, prices rose by up to 500 per cent according to published reports at the time. The price spiral in medicines created such a furore that the government went on the defensive immediately, and officials of the Drug Regulatory Authority of Pakistan (Drap) told parliamentary committees that the pharmaceutical companies had gone beyond their allowed limits in raising drug prices after two key notifications were issued.
By April, the minister health, Aamer Mehmoud Kiani, was fending off allegations that the whole fiasco was his fault, and by April 23 the prime minister fired Kiani. He appointed Zafar Mirza, a respected former World Health Organisation official, as special assistant to the prime minister on health.
Mirza told the press that, on the day of his appointment, the prime minister told him to bring down the prices of medicines “within 72 hours”. That was back in April 2019. But it was too late. The genie was already out of the bottle, and though Mirza took some steps, he has been struggling since then to actually get prices down again.
Too bad millions of poor people had to suffer because essential life-saving medicines were out of their reach.
As late as early January, he was continuing to promise a 15pc reduction in drug prices during an appearance on a TV talk show. On Dec 25 last year, the cabinet was still taking decisions such as ordering a reduction in the prices of 89 medicines, through Drap. But the price hike once it was notified early last year was described in some sections of the press as the largest in 40 years.
In its defence, the government claimed that it had acted under Supreme Court orders when the notifications were issued. This does not explain how they sought a reversal of the price hike once the public backlash hit. It also does not explain how many drugs saw price increases far in excess of what had been approved.
I suppose we could say those were innocent days, when a new government was learning the ropes, and they undertook what was a very delicate task in a ham-handed manner and let the genie out of the bottle and has spent months since then swatting away questions. Too bad millions of poor people had to suffer because essential life-saving medicines were now out of their reach.
But it didn’t end there. In the summer came gas and power price hikes. This time they blamed it on the IMF and on the accumulated circular debt left behind by the previous government. But quietly, under the radar of the crushing inflation that these price hikes unleashed, the government reaped a solid dividend in the shape of increased revenue collection. There was a massive hike in July in gas prices, another in September, and then a request came for an additional hike in December that has been put off given the ongoing wheat price uproar.
Once the dust settles, a gas price increase that could be as high as 221pc for some category of consumers is lying in wait. Power pricing was increased under what they call a ‘full-cost recovery’ formula, which is a fancy and technical way of saying that the price of power that is lost or stolen should be recovered from those consumers who are already paying their bills, meaning you and me.
This government cannot manage administered prices. A significant chunk of Pakistan’s prices are administered by the government, from wheat to power to gas. Another significant share of prices is heavily regulated, such as medicines. In each case the government has sat in the centre of a massive lobbying storm, and some of this lobbying can get very slick indeed.
The pharmaceuticals, for example, had been lobbying for years for a price hike, but successive governments knew what this would entail, and rather than granting the request outright, preferred to work with them to reform the pricing mechanism. Likewise, the state-owned gas utilities routinely come to the government with stories about investments that need to be made, infrastructure to be upgraded, unaccounted for gases targets to be relaxed, and prices to be hiked. It is the government’s job to see through this lobbying and decide which of the requests needs to be accommodated and which ones should be rejected. That takes some brains; it takes some experience dealing with private-sector sharks or the government bureaucracy, which would, if given half the chance, pass on the costs of its own perks, privileges and post-retirement benefits onto the consumers in the garb of ‘full-cost recovery’.
The wheat price crisis is many weeks in the making. As far back as last summer, it was known that stocks are insufficient to get us through the year. But nobody seemed to care because it was really nobody’s job to care. The government only woke up to the problem once it turned into a full-blown crisis, just like they did with the medicine price hike. First they blamed the Sindh government, then they blamed profiteers, and now they’re reduced to saying things like ‘what’s the big deal? Nobody has died from not getting some roti!’
This is what happens when nobody is minding the shop. Special interests, whether in bureaucracy or the private sector, devour the country and its wealth up like termites; when the prime minister is too busy enjoying the pageantry of being in power, cutting ribbons, making bombastic promises and the country floats rudderless. Only after the damage is done does he wake up to issue angry orders, demanding it all be rolled back. This prime minister is not fit to rule, how much more evidence is needed to establish this?
The writer is a member of staff.
Published in Dawn, January 23rd, 2020