IT is, perhaps, for the first time that the present Government provided undiluted major relief to the people of Pakistan to mitigate their economic sufferings in the wake of back-breaking inflation.
In his address to the nation on Monday, Prime Minister Imran Khan announced a series of measures that can surely be called genuine as these would directly contribute towards resolution of the woes of the people and will have an impact on the entire population and not just a particular segment as had been the case in the past when targeted relief was provided.
Irrespective of what triggered inflation and where Pakistan stood in terms of prices of petrol in the list of countries of the globe, the fact remains the inflation has gone beyond the absorbing capacity of the people and substantial relief was overdue and the Prime Minister responded to the aspirations of the people during his address to the nation.
He announced Rs 10/- a litre decrease in prices of petrol and diesel; a cut of five rupee in electricity tariff (fuel adjustment); a hike of Rs 2,000 in the stipend for the poor under Ehsaas programme; skill-based internships for graduates; exemption from capital gain tax for IT startups; and tax/foreign exchange exemption for companies and freelancers in IT sector.
That the Prime Minister meant business became evident from his declaration that there would be no further increase in the prices of oil and electricity till the next budget, a decision that is expected to lend the much-needed stability and predictability to the prices situation.
The relief assumes greater significance as the Oil and Gas Regulatory Authority (OGRA) had recommended an increase of Rs 10 in the prices of petrol and diesel for the current fortnight.
No doubt, the Government will have to incur huge subsidies to maintain the prices of petroleum products at the announced level but it is the responsibility of the Governments to adjust their policies keeping in view the overall economic and monetary conditions of the masses.
The relief could have been made more relevant if the cut in electricity price was applied on the base rate and not under the head of fuel adjustment.
Interestingly, earlier in the day, NEPRA announced a hike of Rs 5.94 a unit in the price of electricity (on account of fuel adjustment) and during hearing of the case it became evident that the rate of FAC would have been much less if uninterrupted supply of LNG was ensured for power plants and focus was kept on wind and solar generation.
This calls for a fundamental change in the policies of the Government to ensure long term and sustainable relief to the people in the energy sector.
The Government is on record repeatedly committing itself to bring down the electricity tariff after increase in the ratio of hydel, solar and wind power in the national energy mix and therefore, such projects should be approved and implemented on priority basis as provision of cheaper and regular electricity and gas to the industry was vital for economic development of the country.
In the given situation, IT is the only sector that has the potential to help resolve financial and economic challenges facing Pakistan and in this backdrop the decision of the Prime Minister to provide liberal tax incentives to the sector would surely help realize its true potential.
The Government should also consider providing comprehensive incentives for local manufacturing of cellular phones (presently only assembly is done), tablets, laptops and other electronic gadgets that are becoming a must for socio-economic development and the country has to spend hard-earned foreign exchange on their import.
The increase in Ehsaas stipend from the existing Rs 12,000 to Rs 14,000 would also help mitigate problems of the deserving families.
It is also time for the Government as well as the State Bank of Pakistan to take necessary measures to check the downward slide in the value of rupee as inflation in Pakistan has much to do with the record devaluation.
At the same time, the most important aspect of the relief measures announced by the Prime Minister is their trickledown effect, which must be ensured both by the Federal and provincial governments as well as district administration.
Industrialists, businessmen and transporters are always to hike prices of products and services whenever rates of petrol and electricity are raised but never pass on the entire relief to the end consumer/passenger.
This is the real test of the Government; otherwise the benefits of the relief would be pocketed by industrialists, businessmen and transporters.
