KARACHI: Former chairman of the Federal Board of Revenue Syed Shabbar Zaidi has said that inflation would never be controlled if corruption money is allowed in the country.

“If you allow money made from corruption to come here, you cannot control inflation. And being unable to settle this will weaken our economic foundations even further,” said Mr Zaidi while speaking on ‘How to fight inflation to ensure progress’.

The Zoom event was organised by the Voice of Habibians under the Habib Public School Alumni Association on Saturday.

Mr Zaidi tried to clear the various perceptions about inflation in Pakistan. “There is reality and there is perception about why inflation is mounting in an extraordinary way here and why it is getting out of our control,” he said.

‘Brokers are out of govt control’

“There is an economic side to why we cannot control our high prices. It is due to retail prices,” he said.

“There are people here earning extraordinarily. We can understand what is really happening by studying the Sugar Inquiry Commission report. Analysing it will tell you about what is happening in Pakistan.

“For example, the players in sugar are the growers, mill owner, the brokers, the retailers, traders, sellers and the consumer. The mill owners should be responsible for its pricing but there are 85 to 90 mills here and the brokers only around 25. These brokers buy the sugar and sell it to the markets. So the money earned by them is moving this market. And it is all undocumented, which is why there is a price hike in sugar,” he explained.

“The brokers are out of control of the government. Their sales and receipts are not in the books. So this money is not taxed. There is no corporate or tax record of it. And this money is running your market,” he tried to simplifying his theory.

“The inflation arises from this retail price rate. It is not letting our economic sectors function,” Mr Zaidi said.

“Similarly, the supply side is also in the hands of a particular group. They are like money lenders, and their kind of system for running the markets needs to be changed. Until that happens, you can forget about price control,” he said.

“This unregulated and undocumented retail price rate sector needs to be eliminated in order to solve the price inflation factor,” he added.

‘Close exchange firms if you want to fix dollar rate’

“Another issue that is seen here is a psychological one, about the dollar and rupee rates. The rupee shoots whenever anything, such as a change in government, happens. We need to also see how we can manage this rupee-dollar parity,” he said.

“You want to fix the dollar rate, close the money exchange companies,” he pointed out.

“We need to settle where we want our economy to go? Do we even want to remedy the issues faced by our economy? Here we like to talk against the cash economy but we do not do anything to stop it,” he said.

“We need to go to the farm to market. We need to improve the farm-to-market mechanism. We need to compare the prices of commodities in different parts of the country. This will have the consumer himself get after the seller about why he is selling this at a high rate,” he said.

“Here in Pakistan, we have non-tax filers or non-filers. I had asked someone once what a non-filer was. Why can’t we call a non-filer a thief because that is what a non-filer of taxes is. Not calling him a thief is accepting his crime,” he pointed out, adding that here we can’t call a spade a spade.

“Who is the ultimate beneficiary of inflation? That very corrupt person rolling in the money. All these things we have created ourselves. They cannot be fixed easily. You first need to decide if you even want to fix things. You need to have the will to set the fundamentals right and for that you need technology, market capacity, public awareness, etc.”

“Cash economy, lawlessness and no documentation hurts your economy,” he concluded.

Published in Dawn, October 4th, 2021