SEVERAL important developments of Monday confirmed, once again, that the government continues dropping mixed signals as far as the need to ensure trickledown effect of the improved macro-economic conditions are concerned.
The monthly economic outlook report of the Finance Ministry projected a positive export outlook and a moderate rise in inflation to a range of 5-7 per cent for 2025-26, citing improved global economic conditions and domestic recovery trends. At the same time, citing fluctuations in international crude oil prices, it announced a massive hike in the price of diesel and petrol, which have been jacked up by Rs. 10.39 and Rs. 8.36 a litre respectively. And the Federal Government abolished the Electricity Duty (ED) on bills but Minister for Energy Sardar Awais Leghari sensitized consumers about the possibility of debt servicing charge of Rs. 3.23 a unit if demand for power reduces. In a related development, OGRA announced Rs. 7.43 per kilogram reduction in the price of LPG.
There is no doubt that both the domestic and global economic outlooks are encouraging but unfortunately people of Pakistan are not getting due relief because of major conflicts in the policies of the government, which is always quick to pass on the adverse impact but hesitates in providing due relief. The prices of oil dropped to crashing levels during the last few months but the authorities concerned, instead of passing on the benefit, either increased them or adjusted them against levies and taxes. There is no denying the fact that prices of oil went up (between $82 to 87 a barrel) due to Iran-Israel war but these reverted back (to $67 a barrel) immediately after the ceasefire, therefore, there was no urgency or justification for the government to increase the prices in a wholesale manner. There will be negligible impact of the measures announced by the government in the power sector but incessant hike in oil prices will mean unbearable burden on every citizen. There is clear evidence to suggest that the government is using oil prices to mint money at the expense of the common man. As for abolition of the Electricity Duty from bills from July, this is surely yet another manifestation of the government’s intention to maximize relief for consumers after waiver of television fee a day earlier. However, like the TV fee, abolition of ED would not result in any tangible benefit for consumers as the amount of ED was just in double digits for most of them. Unfortunately, the government is not ready to take genuine measures to provide substantial relief to power consumers, who are forced to pay a number of taxes that multiply their bills. These include GST, Fuel Price Adjustment, FC Surcharge, Quarterly Tariff Adjustments and GST on FPA besides a cruel slab system that discourages consumption when the country has surplus generation capacity. The authorities legitimately take credit for economic stabilization and are aiming at growth but the target will remain a dream until and unless a favourable environment is created in the shape of reduced cost of doing business. Presently, the measures of the government serve as a severe blow to this cherished objective and this is confirmed by the monthly economic outlook released by the Finance Ministry itself, which points to a negligible increase in exports and a decline in foreign investment. IT offered an opportunity to increase foreign exchange earnings but upsurge in the sector will be seriously impacted by the decision of the Government to tax free lancers as we also witnessed in the case of excessive taxation of IT that forced many companies to move their headquarters abroad. The tendency to kill the hen that laid golden eggs needs to be checked.
