The Federal Cabinet in its meeting today is likely to announce a Rs15 billion package to provide relief to the consumers from back-breaking inflation. The cabinet will consider diverting Rs15 billion from the Ehsaas Programme allocation towards providing subsidies to the masses. The relief will be provided through the Utility Stores Corporation (USC).
“The direct subsidies might utilise Rs40 to 50 billion through direct and indirect intervention going to be approved by the cabinet today,” the report said. Prime Minister Imran Khan has also revived the Special Focus Group (SFG) on essential food items under the jurisdiction of the Ministry of National Food Security and Research with the mandate to develop the Management Information System in order to plan and coordinate demand and supply of 15 to 20 essential food items.
The Economic Coordination Committee (ECC) of the Cabinet on Monday did not discuss the hike in gas tariff. The decision in this regard, the report said, would be taken in the cabinet meeting to hike the prices of gas or postpone it for time being keeping in view the rising inflationary pressures. The ECC also did not consider the prices of power sector fixation mechanism during the meeting.
Last week the premier had ordered an investigation into the flour and wheat crisis and the factors behind the surge in sugar prices. He also announced to go to any extent to provide relief to the common man. However, going by the fact that the price-hike is affecting each and every citizen and families of the country, the approach of targeted relief is hardly expected to resolve problems of the people at large. The extension of Utility Stores package by five months might help improve financial health of the institution but benefits of the package would reach just to a negligible population that has access to its outlets. Even addition of two thousand ‘Youth Stores’ is unlikely to make any tangible difference given the complexity and magnitude of the problem of inflation and its impact on masses. It is also unfortunate that instead of reducing the prices further, the Cabinet, thought it appropriate to raise the price of sugar by Rs 2 per kilo and that of ghee by Rs 5 a kilogram. The Cabinet has done well by overruling decision of the ECC not to import sugar, which apparently favoured the sugar mafia. Speedy import without taxes and duties has the potential to force the mafia to curtail its huge profit margins and sell the commodity at reasonable rates.
Moreover, never had it encountered shortages of the basic most commodities of daily use with people pointing finger at government related figures calling them a mafia responsible for the shortages. Never in the past had a government with an agenda to put the economy on rails had mismanaged it in a way that was to force all sections of population from factory workers, peasants, urban middle class and the entire spectrum of business community to cry out in agony. The steps approved by the Cabinet are also transitory in nature whereas there was need to bring about a change in the policies of the Government that are responsible for unprecedented price-hike.
The best option for the government to support the targeted segment is to offer them direct income support. The only effective way is ensuring a price control mechanisms throughout the year. The Government should pass on actual benefit of reduced prices of oil in the international market to the people, lower gas and electricity tariff and provide food items exemption from sales tax and customs duties. This only needs a plan, constructed in active consultation with stakeholders such as farmers, market players, and retailers, to save the government from announcing miscalculated relief packages.