THE statement of Finance Minister Miftah Ismail that the inflation is nearing its peak is reflective of the realization on the part of the Government that it is number one issue for people of Pakistan but practical and effective measures will have to be taken including change of some policies to reverse the trend.
In an interview, he anticipated that the economy would grow by 3.5% during the ongoing financial year and the inflation – currently at a 47-year high and second highest in Asia – would average at 15% during the year.
No one would disagree with the Minister when he says Pakistan needs to survive within its means and that the decades old system will have to be changed to boost the economy but there are sharp differences on ways and means to achieve this cherished objective.
People of Pakistan are fully aware of the implications of the so-called foreign aid (which is, in fact, crippling debt burden) as the conditions attached by the donors have added to their miseries and therefore, there is consensus on the need to mobilize domestic resources.
However, the track record of all governments showed they paid just lip-service to the goal of broadening the tax base as powerful lobbies always scuttled all such endeavours and the burden ultimately fell on the common man.
The decision of the present Government to make the business community pay tax through electricity bills was widely hailed but as in the past they succeeded in pressurizing the Government and the axe fell on the ordinary citizen.
This is absolutely not a prudent approach to raise and increase revenue generation through POL products and utility tariffs as this is not only unjust to consumers but also hampers the overall growth due to an increase in cost of production and doing business.
How can we expect a reasonable growth and movement towards establishment of a welfare state when resources of a majority of the people are not enough even to pay electricity bills?
The very fact that the inflation in Pakistan is second highest in Asia is a clear testimony that the phenomenon has not much to do with the global economy/trade as we are made to believe but is country-specific and steps will have to be taken to address the challenge squarely and that too on war-footings.
The Government will have to review its policies that increase inflation like exchange rate, increase in base price and FAC on power bills, taxation on POL products, denial of relief to the consumer on account of declining prices of oil in the international market besides a crackdown on profiteers and cartels.
Action against the ghee and edible oil industry, which is minting money at the cost of the poor, should serve as a test case.
