LAHORE: Chief Minister Hamza Shehbaz, who is facing a question over the legality of his government after the Supreme Court declared that the votes of defecting lawmakers will not be counted, on Thursday rushed to announce a yearly subsidy of Rs200 billion on flour reducing the price of a 10kg (flour) bag from Rs650 to Rs490.

Hamza seems to be in a hurry to take such ‘political initiatives’ after he was told by his legal advisers that he might go home in the light of the apex court’s verdict on defection.

The opposition has questioned where this huge subsidy of Rs200bn would come from. “Such moves will serve as economic landmines for the next government in Punjab,” opposition PML-Q says.

Hamza told a maiden presser on Thursday that since he had no cabinet because of President Arif Alvi’s violation of the constitution he would “all alone ‘’ take steps to provide relief to the people of Punjab.

Opposition questions intention; asks where will money come from

“My government has decided to reduce the price of a 10kg flour bag from Rs650 to Rs490 and for the purpose a yearly subsidy of Rs200bn will be given on it,” he said but did not explain from where the provincial government would manage to arrange this amount. According to official sources, the Punjab government will take a hit of Rs17 billion per month in subsidising flour by Rs16 per kilo as it will supply wheat to millers at Rs1,765 per maund – a commodity, which it is still purchasing at Rs2,200 per maund.The official circles, however, think that the supply of subsidized wheat would continue till the next general elections, whenever they are held.

Welcoming the decision, the Pakistan Flour Mills Association (PFMA) demanded that the provincial government also consider demand and increase supply to 21,000 tonnes a day – from 1,7000 tonnes that it plans to release now.

“Once subsidised flour hits the market, both people and millers stop grinding their own wheat,” says Asim Raza of the PFMA. Even farmers, knowing they can sell the commodity later at a higher price, would save their own wheat and the entire demand is shifted to officially-released subsidised wheat. It adds to the demand, requiring more wheat, he claims.

“The government should also consider that if the entire increased demand of people is not met, the experiment runs the risk of failure – at least in the public psyche,” explains another miller from the city. Say, if shortages take hold of the market and the media starts airing it, the entire initiative will suffer. So, it would be better for the government to flood the market to meet the calculated as well as the raised demand for flour. It cannot afford to create the impression of shortage, he warns.

The officials involved in the planning part of the package, however, think that they set up safeguards and would be monitoring the situation very closely.

“Initially, there is no timeline for the package, as being claimed by the millers. But, the department would review the wheat release policy a month down the line. Similarly, one cannot say with certainty what would be the precise price of subsidy as many variables would come into play – how much wheat is released, how fluctuations in mark-up rate, if they happen, behave over the period of time, etc. Punjab would also be keeping an eye on flour prices in other provinces. If it comes down, it would mean that flour was finding its way to other federating units at the cost of the Punjab government – so the exit points would have to be monitored. These factors will be continuously looked into and the release policy adjusted accordingly,” says a department official.

“However, the package should also bring down the price of wheat in the market as most of the demand would take off the market,” explains another official. The department has created strict criteria for the millers grinding and it would not be giving wheat to “chakkis,” which are hard to check for any pilferage. In the final words, the department would shortly be starting releasing wheat under the subsidy package and continuously watch the results,” he says.

Published in Dawn, May 20th, 2022