Amid political chaos and the country’s economy in free fall, the Shehbaz Sharif-led government is set to present the next fiscal year’s budget in the National Assembly on Friday.
The announcement will come in the wake of a series of talks with the International Monetary Fund (IMF) in Doha, where the lender has strongly urged the government to reduce subsidies and increase taxation. While blaming the PTI regime for the country’s economic turmoil, Finance Minister Miftah Ismail has said the government will aim to reduce the fiscal deficit in the upcoming financial year.
Meanwhile, Prime Minister Shehbaz has announced a Rs28 billion relief package for lower income households in the upcoming budget and is hoping for foreign aid from allies — China, Saudi Arabia, and the UAE — to stop the economy from haemorrhaging. However, his government's latest move of increasing fuel prices by Rs30 — not once but twice in as many weeks — and speculations of a rise in taxes for the salaried class, in addition to a hike in electricity and gas tariffs is reflective of the Fund’s instructions.
Accounting for talks with the IMF and the prevalent economic conditions, economists predict that the new budget will be stringent and heavy on the common man’s pocket.
The prices of goods and services have already skyrocketed due to the global economic downturn caused by the Covid-19 pandemic. Moreover, Pakistan also faces a massive debt burden, further exacerbated by the rapidly devaluating rupee, all of which are causes for the latest economic crisis in the country.
Considering a situation where a nuclear family with an average size of five to six members and has only one bread earner, survival in such testing times has become a challenge to say the least. People from all socio-economic backgrounds are feeling the pinch due to skyrocketing inflation, which has severely hampered their purchasing power and spending trends.
Roti, Kapra, Makaan
The political chant Roti, Kapra, Makaan went places when former prime minister Zulfikar Ali Bhutto advocated for basic rights in his political campaigns back in the 1970s. Today, that rallying cry has grown ever louder — but there’s no one to shout it from the front.
The most basic form of a meal, the naan bread — a staple for all socio-economic classes, be it the richest CEOs or daily-wage labourers — has seen a substantial price hike in recent times. Sold for Rs8 to Rs10 in 2019, the naan has seen a 120 per cent rise in its price over the last three years alone and is now being sold for Rs20 to Rs25, depending on where you live. Tandoor owners say they have no choice but to increase the prices, blaming the government for increasing wheat prices and gas tariffs.
Sabir Ali, a cashier at a local tandoor in Nazimabad, Karachi, told Dawn.com that he has observed a marked shift in the buying patterns of his customers. A significant number who used to buy naan have found a cheaper alternative in chapati which is sold for Rs12 at his shop. “It is becoming increasingly difficult for us to manage the shop with the increased flour prices, gas and electricity bills, besides the employees’ salaries,” he says.
Meanwhile, finding a shelter in overpopulated metropolitan cities of the country is a task in itself. The rise in property values has made it impossible for the average Joe to even think of buying a home of their own. The only possible option left for a family is to search for properties to rent, which in turn keeps increasing due to the rise in demand and the steady increase in property values.
The Imran Khan-led government patted itself on the back for providing benefits to the real estate and construction sector, but these only proved beneficial for the already-minted real estate developers and construction magnates. Their claim of building five million homes under the Naya Pakistan housing scheme went down the drain too, as they could only build 21,980.
Finding a shelter and maintaining it comes with a list of supporting expenditures. The incumbent government has already increased tariffs on utilities, further burdening citizens.
Tayyab Tariq, an accountancy professional in Karachi, shared how his family’s expenditures have risen in the past few years. “My savings have gone to zero due to inflation,” he said. "My expenses on rent, utility bills, and fuel have gone up by almost 60pc to 70pc compared to last year."
Shop till you drop!
They say ‘shop till you drop’. In Pakistan, grocery shopping can make your balance drop faster than you can say stop.
To start off, a 10kg flour bag that was sold for Rs350 to Rs420 in 2019 is currently priced at Rs800 to Rs900. Then there is sugar, which was sold for Rs45 to Rs50 rupees in 2019, but now costs Rs100 to Rs120 in different markets across the country.
Milk prices have also risen, with suppliers blaming the government for fuel price hikes and a rise in the cost of feeding their animals.
Oil and Ghee prices have seen a massive jump as well. Cooking oil was sold for Rs180 to Rs200 in 2019 and saw a sharp increase by 150pc in the PTI regime in 2020. The current regime has recently increased cooking oil and ghee prices by more than Rs200 rupees in one go, making ghee available at a whopping Rs600 per kg.
Even the prices of pulses have seen a Rs30 rise, while Basmati rice, which was sold for Rs70 to Rs80 per kilogramme in 2019, now goes for between Rs150 to Rs200.
Besides these essential food Items, there are several other commodities in the average household’s grocery basket. The prices of toiletries and personal care products have seen a hike too with a rise in import duties and the cost of production.
Aisha Moiz, a mother of four and a housewife, said her grocery bill has increased exponentially over the past few months alone. She recounted how her family’s expenditures on groceries before the pandemic were at least 40pc to 45pc less than where they currently stand. “Beef was sold for Rs450 to Rs500 back then and is now past Rs900 per kg. The price hikes have had an overall impact on our monthly budget, which is now mainly spent on household and grocery expenditures,” she lamented.
Fuel is one of the major drivers of the economy. An increase in fuel prices has a cyclical effect on the prices of all other goods which require transport, which in turn drives up inflation. Last month, inflation clocked in at 13.76pc — the highest in two years.
In Pakistan, as is the case across the world, the prices of petroleum products have seen an exponential rise over the last few years. In 2019, the price of petrol ranged from Rs81 to Rs95 per litre. After the latest price hikes by the government, petrol has seen an over 100pc jump in its retail price and is currently being sold at almost Rs210.
Moreover, public transport across the country is in absolute shambles. With a few mass transit projects operational in larger cities, smaller cities and even Karachi still lack basic public transport infrastructure. Moreover, rising fuel prices have forced authorities to reevaluate their costing models and increase their fares. The Punjab Mass Transit Authority is finalising a plan to introduce a distance-based fare system rather than a uniform rate for all routes.
Shanze Moin, a freelancer and a student pursuing her bachelor's degree in Karachi, shared her experience of using online cab services on which she spends over Rs10,000 a month going to and from her home to university. She added that these travel expenditures take away the biggest chunk of her monthly budget which is financed by her pocket money and her earnings through freelance projects. Asked about her hopes for the upcoming budget, she said that "instead of further burdening citizens who are already paying taxes, the government should crack down on tax theft and increase the taxpayers' base through a better tracking system".
Abdul Khaliq, who works at a towel factory in Karachi and commutes daily by bus, shared that after the fuel price hike, the A3 bus in Karachi was charging him Rs30 instead of Rs20 to travel from the bus stop at Liaquatabad flyover till Nipa Chowrangi. He added that the rise in bus fares have caused his daily expenditure to go up which adversely impacted his overall monthly expenses. He hoped the government would take effective measures to mitigate the effects of the back-breaking inflation that has gripped the country.
Where daily commuters pray for fares to go down, their commutes are expected to become even dearer as the government, on the IMF’s directions, plans to raise the fuel prices further in the months to come.
“The budget and the fuel hike may not take a huge toll on my family or me yet, but it is a certain shock for those who are struggling financially,” said Malik Umar, a 20-year-old resident of Multan. But the latest hike has certainly made him reevaluate his spending patterns. “Now, I often take the Multan metrobus instead of my car,” he said.
“Using the Metro helps me save Rs600 to Rs700 from my daily fuel expense and I am able to cover the same distance in Rs80 to Rs100 via the metro.” However, he expects the fares of the metro to go up based on a conversation he overheard between the bus captain and one of the fellow passengers.
In such testing times, if you dream of owning a motorcycle or a car of your own, a quick look at the latest prices will give you a stark reality check. Atlas Honda’s all-time famous CD 70 was being sold for between Rs 65,000 to 70,000 in 2019. It is now priced at over Rs 105,000.
The cheapest locally assembled car, the Suzuki Alto, was being sold for between Rs1 million and Rs1.3m just three years ago. The depreciation in the rupee's value and the global economic recession has affected the automobile industry drastically, due to which the same car is now being sold in different variants ranging from Rs Rs1.5m to Rs2m.
Ebad Abdullah, a textile trader, was looking to buy a new car, but due to the ever increasing prices of automobiles, he settled on a used one. This, he said, also helped him avoid paying extra charges and taxes for vehicle registration. “The import bans will result in further price hikes in the local automobile industry due to a supply deficit," said the 31-year-old. "But I still hope that the high taxes imposed by the PTI regime on vehicles are relaxed during this budget, and I expect the coalition government to do so as people-friendly budget policies will help them improve their political position for the next elections.”
We do not receive education and healthcare — we buy it!
Education is a basic need and a number of countries in the Western world provide free education to its citizens. In Pakistan, however, educational institutes — the good ones anyway — are in the hands of the private sector, which is often accused by parents of pillaging students and their parents with fee hikes. An average family with three to four children going to schools and colleges takes the major chunk of their family’s income.
Aman Ullah, a father of four and a Quran instructor at a school, said he struggles every month to pay his children’s school fees along with covering his other expenses. The 43-year-old added that almost 40pc of his monthly income goes towards his children's school and van fees. The other 35pc to 40pc is spent on groceries and healthcare for his ailing mother, leaving him with very little to meet his utility bills.
Universities charge millions and the dilemma is that when students graduate, the job market is not very kind to them either. Even if the graduates land a job, the salaries that they receive are so low that it wouldn’t even cover their monthly transport expenses.
Muhammad Daniyal, a Lahore-based mechanical engineer, who graduated in 2021 from a university in Lahore, landed a job right after his graduation but struggles to meet his expenses. The 24-year-old, who initially planned on saving part of his income to purchase a laptop, told Dawn.com: “My starting salary was quite less and left me with hardly Rs 3,000 to Rs 4,000 as savings, which I eventually spent on sundry expenses after paying for my travel costs and after contributing minimally towards the family’s expenses.”
Amid all this, the Higher Education Commission (HEC) too fears a budget cut this year, as the Finance Ministry reports said that it would allocate only Rs30 billion to the commission.
Although the concerns were allayed by PM Shehbaz, the HEC still believes that their demand of Rs104 billion will not be met. The previous government allocated a Rs 66.25 billion budget to the commission which only catered to 28pc of the its needs.
A similar quandary continues when it comes to healthcare. Pakistan spent $39.5 per capita on healthcare in 2019 — even lesser than the prescribed $44 by the World Health Organisation. Moreover, the figure is far less than what our neighbouring countries spent on the sector.
Quality healthcare is only available in private hospitals. Moreover, the state of public hospitals and healthcare is going downhill with each passing year, with many tertiary care public hospitals across the country failing to provide adequate services.
The mental toll
The budget document presented and passed by the National Assembly each year contains details of the allocations and expenditures from the country's treasury under different heads. What the numbers do not account for is the toll these inflationary trends exact on the mental health on the bread-winner of each household.
Most Pakistani families rely on a single earner, who must ensure they are able to afford sending the children to school, meeting the family’s day-to-day expenditures, account for health emergencies, among other sundry expenditures listed above. All of these pressures can cause severe depression, which eventually has an effect on the overall domestic environment. Families who used to be able to set aside some savings or keep a budget for recreation, now use that same money to fulfill their needs.
According to Aman Ullah, the financial stress has had an impact on his mental health as he's always thinking of ways to increase his income to make ends meet. “I used to give Rs3000 to Rs4000 to my wife so that the family could use the money to buy food from the nearby restaurant once or twice a month. That money is now spent on my mother's medical bills," he lamented, adding that inflation had taken away what little recreation the family could afford and "now we just pray in despair for a miracle".
Ahmad Ali, a wellness counsellor in Karachi, said that inflation is a major cause of stress, especially among lower- and middle-income families. "Financial issues, joblessness and inflation have a profound negative impact on people's mental health,” he said, adding that when stress levels exacerbate, it leads to distress and can lead to mental disorders such as anxiety and depression, and even suicide.
According to Ali, stress also causes people to take to substance abuse as a coping mechanism.
Is there a way forward?
Pakistan has a long history of economic crises, further exacerbated by one political crisis after another. The country’s ruling elite have consistently failed to live up to its promises.
Pakistan is still dependent on obsolete energy resources, industries, transport infrastructure and educational systems. In addition to these failures, politically motivated economic policies have made good flashy headlines, but failed to provide relief to the common man in the long term.
What is especially worrying is that the prevalent economic crisis is here to stay — at least for a while. The prices of goods and services are certainly not going down. With two massive fuel price hikes already breaking backs, the government is rumoured to drop another petrol bomb soon. Promising a relief package on the one side, the Shehbaz-led coalition regime is expected to increase tariffs and taxes via the budget on Friday.
The country’s economy is in dire need of reforms and for that, certain tough calls will have to be made if we are to come out of the crisis. But with a family to feed, rent to pay, increased tuition fees, transport expenses, grocery bills, and unpredictable health expenditures, the common man is more worried than ever about how to make ends meet.