October 25, 2020

Government leaders have been promising to bring the prices of essential items down — but the task has proved too much for them

Inflation is on the march, laying waste to much that happens to be on its way. Scores upon scores of factories that used to employ thousands of workers and produce goods not only for consumers around them but also to be exported are non-operational. Our exports have declined and jobs are disappearing. With half the cylinders misfiring, the engine of the economy lacks the power to pull it out of the trench it is in and halt the rising trend in the prices. Government leaders appear helpless, clueless. The number of people below the poverty line, those who can no longer afford even the essentials out of their meagre incomes, is increasing.

Figures released by the Pakistan Bureau of Statistics indicate that the country has now had double-digit food inflation for longer than an entire year. Painfully, this is true not only of the urban centres but also the rural areas that have long been considered immune to food shortages on account of their agricultural economy and social structures. Government leaders have been promising to bring the prices down but the task has proved too much for their skills given the limited options available to them.

Strict measures have been hinted at and an army of volunteers mobilised to support the administration. The task is gigantic and there are many challenges on the way to putting a halt to the persistent rising trend in prices. The government is also being criticised for letting the rupee depreciate from Rs122.79 per US dollar in the end of July 2018 to Rs164.84 by the end of September 2020. Under the current economic conditions, the gains from depreciation — export competitiveness leading to growth and employment — are hard to come by. The sudden plunges in the value of the rupee have resulted in panic, further compromising the gains.

Closure of factories — even whole industries — that had created and sustained jobs in downstream sectors has resulted in large scale unemployment, poverty and law and order problems. Besides the spiraling impact of the Covid-19 pandemic, exorbitant rates of electricity and gas have incapacitated the industrial base. The persistent squeeze in goods transport business, for example, is just another indicator of the poor shape the export related sector is in. Punjab Goods Transport Association (PGTA) claims that the goods transport business has shrunk to nearly 40 percent of what it used to be. Read on: