IN these times of inflation, the small doses of cash the government plans to make available to 20m poor to low-income households for the next six months fall far short of expectations, though the prime minister has dubbed it Pakistan’s biggest-ever relief package. The government believes the disbursement of Rs1,000 per household every month through the Ehsaas network for purchasing ghee/edible oil, wheat flour and pulses at 30pc discount on their retail prices would help 130m people, or 53pc of the population earning up to Rs31,500 per month. Would it? The Rs120bn package translates into a subsidy of Rs154 per person per month. How is this going to provide the intended relief to the targeted population against surging inflation is anybody’s guess. The amount of subsidy isn’t the only factor fuelling public cynicism regarding the relief programme.
The PM’s warning that the government is set to increase energy prices to cover its fiscal deficit didn’t help either. The fresh round of inflation that the impending increases in the prices of petroleum products, gas and electricity will unleash is bound to offset any ‘positive’ impact the relief package is expected to have. A large majority of the targeted households will be much poorer than before once energy rates go up. In the last couple of years, the surge in inflation has enhanced the financial strain on poor and middle-class families across the urban and rural divide. With half their monthly income spent on food, the ever-rising cost of energy and transport have raised concerns about the escalation in hunger, poverty and malnutrition. Sadly, the government’s response has been less than desired.
The constant government attempt to shift the blame for bad economic conditions and inflation to the policies of its predecessor or more recently the post-Covid global commodity cycle is an excuse to absolve itself of any responsibility. In the last few months, we’ve seen ministers trying to justify high food and fuel inflation in the country by comparing domestic prices with ones elsewhere in the region and sometimes in the rest of the world. Pakistan may still be cheaper than India and Bangladesh but how is this knowledge a source of comfort for the low-and middle-income classes of this country? Moreover, the comparison is flawed since it doesn’t refer to the significantly greater per capita income and state support in these countries. The ministers also don’t mention that petroleum products in Pakistan are structured in a way that benefits car owners and makes public transport expensive. For example, HSD used in public transport is costlier in Pakistan than in Bangladesh or Sri Lanka. Likewise, India has a large network for the distribution of essential food items at affordable prices to help its poor. Mitigating the impact of inflation demands serious actions and policies and not simplistic comparisons. Subsidies are also no answer to structural inflation.
Published in Dawn, November 5th, 2021