The Peril of current inflation in Pakistan

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Syed Fawad Ali Shah
At last the opposition parties have sensed the inability of the government to bring tabdeeli till date for which the people of the state of Pakistan had casted their votes discarding all previous traditional politics and politicians. The politicians have placed their fingers on the pulse of the people and its every beat is shouting the word inflation. The word inflation has previously toppled the Ayub regime which for all practical purposes was one of the finest era the state of Pakistan has ever witnessed. A need was therefore felt to delve into the reasons of the current inflation in Pakistan which is absolutely in a mood to take majority of its population below the poverty line. I will comment on the reasons for inflation in Pakistan with the help of the following table; Year Inter Bank Rate Percenta ge of increase Inflation GDP Growt h FBR Revenue Collecti on FBR Percenta ge of increase Export Import Balance of Trade Remittances  2014- 15 101.77 0 4.53 4.7 2,590- 2015-16 104.8 3.0 2.86 5.5 3,1120  2016- 17 106 1.1 4.2 5.6 3,368 8 20,422 52,910 (32,488) 6,519 2017-18 123.85 18.9 3.9 5.83,751 1123,212 60,795 (37,583) 19,710 2018-19 149.05 31.2 6.7 1.0 3,8292 22,958 54,763 (31,805) 21,038 2019-20 164.65 23.3 11.1 1.5 3,957321,394 44,553 (23,159) 23,120 64.0 52.8-

1. Free Floating US Dollar: The first thing, the current government did was allowing US Dollar to attain heights of its choice. As per statistical data, it has witnessed 64 percent appreciation in the last few years. The question from the people in the Finance Ministry and the State Bank of Pakistan is that why was this hike permitted when you have an established negative balance of trade and your economy is under immense internal and external debt. Mr. Prime Minister, this has only resulted in increasing the import cost of raw material in our industrial sector due to which many industries were compelled to either lay off their staff or close their industrial undertakings. This US dollar appreciation has also increased the quantum of foreign debt. 2. Increase in utility Bills: Mr. Prime Minister, you were advised by the IMF to finance the tax gap by increasing the electricity and gas bills on monthly basis. They are the factory overheads for the industrial undertakings. Adherence to this demand of IMF by your government has forced many manufacturers to close their factories. It is also promoting electricity and gas theft. Abnormal increase in utility bills would increase production cost of the goods manufactured for export. The IMF would never suggest your government to control electricity and gas theft by adoption of modern technology and making their officials accountable for losses/ thefts.

3. Import Substitution:

Mr. Prime Minister, every developed nation at some stage of their development haveadopted the import substitution policy for improving its balance of trade and balance of payment situation. You as a sportsman know, that results are obtained in the field and not through creation of task forces. You have to come up with a scheme for substituting your oil import bill. 4. Reforming the Federal Board of Revenue: Mr. Prime Minister, let the performance figures speak for themselves. The only revenue collection agency in the world witnessing revenue collection growth of more than 52 percent remained subject of you criticism. It has serious capacity issues like acute shortage of human resource, inadequate infrastructure, mobility issues and IT related issues. You still expect it to do more instead of appreciating its effort. An officer of FBR said that the current government expects an old Suzuki FX car to run like other cars on the motorway. As a patriot son of the soil, the apparent criticism on your policy/ performance is not for giving any political gain to anyone. The sole purpose is to make an attempt to rectify your line adopted for the creation of Naya Pakistan. The expectations of the masses who voted for tabdeeli cannot be dashed to the ground for the mere reason of your inability to choose right man for the right job. The following admonitions are tendered before the premier of the state for consideration; i) Stable Rupee: A stable rupee would  ot only stop the flight of capital from our Industrial sector but would also revive the sick units ensuring job opportunities and tax revenues. It would also stop the piling of more external debt on the economy due to rupee stabilization. Above all the serpent of inflation would be bridled which has the capacity of toppling the current regime. ii) Utilities theft control: Installation of electricity meters on transformers and the comparison of units consumed by the transformer meter and the consumer meter would be the litmus test for the efficiency of the WAPDA employees. It can be implemented through a single executive order. The theme is control theft and not appreciate the price. Devise law for punishing the inefficient and corrupt WAPDA and Gas employees. Provision of uninterrupted cheap utilities to the industrial sector would boost export, create more job opportunities and tax revenue. iii) Import substitution: Ensure 24/7 gas supply to your export oriented industry. Revive railways through issuance of order of transportation of all goods to dry ports through railways. Promote import of technology and expertise instead of cars and other luxury items. Commercial counselors shall be assigned export targets on annual and monthly basis and be made accountable for the results. iv) Overseas Pakistanis: They play an important role in the development of the country by sending remittances. Their contribution in nation building remain unfettered irrespective of the economic condition of the state. The diplomatic corps shall be disciplined to value their services and facilitate them in resolution of various issues faced. v) Equip the Federal Board of Revenue: As apparent from its results; it can do wonders by listening to its genuine demands like recruitment, establishment of facilitation offices, resolution of its mobility issues and IT based solutions ensuring its effective outreach to the masses. Its genuine demands of reasonable pay and above all respect shall also be addressed. It would result in the identification of new taxpayers, effective monitoring and audits enabling FBR to exceed the targets assigned. The envisioned concept of Riasat e Madina would not remain a myth if the eyes and ears of the premier are open and ready to listen to any suggestion for devising a right track . The politics of dharnas and jalsas would not work if the serpent of inflation and unemployment is controlled through working on the real causes instead of using district administration to punish the inflationist.

(-The writer is a senior Journalist.)

 

 

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