There are serious problems that need to be tackled with an integrated approach. These include unprecedented hike in oil and food prices, depleting foreign exchange reserves, rupee depreciation, fiscal, trade and current deficits.
Imports of food and commodities are rising. While harvesting of the new wheat crop has just begun, the government had decided to import 250,000 tonnes of wheat. About 1.5 million tonnes of wheat and four million bales of cotton will be imported this year. The exports are less than half of imports, in case of both merchandise and services sector.
The external sector of the economy seems to be buoyant but not robust.
The key solution lies in placing agriculture at the centre of development, encouraging massive investment and modernising agriculture. There is also need to bring about agrarian reforms to increase yield per acre.
A crash programme to boost agriculture can reduce imports of food stuff and industrial raw materials and possibly boost exports of commodities and agro-products in a food-starved international market.
While the services sector particularly the banking sector is robust, the manufacturing has been consolidated, and agriculture has been neglected.
There is so much excess money in the market that it is going into speculative investments in stocks, commodities and real estate. It needs to be diverted into modernisation of agriculture, through tax concessions, if necessary. A major issue is that surplus money is not finding productive channels.
While the procurement or support price of wheat has been raised, it is not known how it will benefit the growers and how much will be siphoned off by the middlemen.
The government is opting for more foreign loans at a time when the current account deficit has so far this year risen to $9.6 billion which is a record figure and much too high, particularly when the foreign exchange reserve is being drawn down. Urgent efforts must be made to increase the exports. Instead, the businessmen are importing more and more for fear of further depreciation of the rupee.
Unless export earnings go up, it would be difficult to sustain direct foreign investment, which shows a downward trend. Besides, foreign investment has fuelled imports rather than exports. The well over $30 billion imports per annum offer an opportunity for import substitution in areas of domestic advantage.
The individual is under stress, the state is under stress; only the rich man with his stores full is free to make money by raising prices arbitrarily. The supply chains need to be smoothened.
The hope that the utility stores can make up for the profiteers has not come to pass . Nonetheless, Trading Corporation of Pakistan has been told to release a quarter million tones of sugar in brackets of one, two and four pounds for retail distribution.
I hope the sugar will go in to the right hands. It is necessary there should be periodic stocktaking to check the efficacy of the measures announced. Otherwise, the good measures will go the way of the bad ones as earlier and that should not be allowed to happen.
Yet another good news for the consumers is an agreement between the government and the Rice Exporters Association of Pakistan. Under the agreement, every rice exporter has to supply rice equal to his exports to the utility stores to get quota for rice exports. Earlier, the government had fixed minimum price for export.
In view of the global shortage and high prices of foodstuff, the government needs to build strategic reserves of food grains to avoid critical shortages and imports at high prices.