TO many, the closure of the state-owned utility stores highlights the failure of successive governments to reform what they believe could have been turned into an effective nationwide social safety net for low-income households. Created over half a century ago to shield the lower middle-class households from market volatility and provide them with a wide range of quality essential kitchen items at subsidised rates under one roof, the network had modernised the retail sector when Pakistani consumers were hardly aware of the concept of chain department stores and supermarkets. Yet these stores lost their utility soon due to massive mismanagement, corruption and embezzlement. For more than half their life, the utility stores represented the most fraught chapter in Pakistan’s public sector management. According to the latest finance ministry’s report, the Utility Stores Corporation had posted a loss of Rs4.1bn during the first six months of the last fiscal year, with cumulative losses rising to Rs15.5bn. This underscores the structural and operational challenges in the network’s management.

In recent years, there had been some talk of official plans to restructure the stores. But no meaningful progress was made. The demand for restructuring them was rooted in the widely held view that the government could use technology to digitise inventory and plug leakages, as well as tighten its oversight of the store network. However, the fact remained that it was unrealistic to expect any government, let alone one as fiscally overstretched and under-resourced as ours, to efficiently manage and run a vast retail operation of nearly 4,000 stores without incurring significant financial losses. Retail has turned into a fast-moving, competitive sector that demands management efficiency — a quality not typically associated with Pakistani bureaucracy. More crucially, the era of blanket, untargeted subsidies is over. With the government cleaning up its stable full of loss-making state-owned enterprises, it is important for it to stop sending across confused signals about the future of these white elephants as it did in the case of the USC. The decision to wind up the stores — as well as the push for the privatisation of PIA — represents a policy shift to get rid of a big financial burden on the budget. Yet despite repeated declarations, progress on this front remains very slow due to the absence of a clear-cut policy framework.

Published in Dawn, Aug 2nd, 2025