Rising unemployment and growing inflation
The hard-hit segments of the population are the
salaried class and the poor
From SHAMIM AHMED RIZVI,
Nov 20 - 26, 2000
Apart from the daunting challenges on the external
fronts the government of Gen. Musharraf is faced with two serious issues
on the domestic front which calls for immediate remedial measures. these
two challenges are rising unemployment and growing inflation and
poverty. The rise in prices of Kitchen items has not only made the life
of poor and low fixed income group harder, but has also fed from lower
middle class to upper middle class.
Consumers are likely to swallow another bitter pill
of price increase, in the holy month of Ramzan, only a few days away, as
the prices of some essential items have already gone beyond affordable
This is the second Ramzan under the present
government. Last year the efforts to control the prices had failed.
There are indications that the local administration may again succumb to
the tricks of hoarders, market speculators, wholesalers and retailers
who know how to fleece the consumers.
For instance, sugar has already hit the headlines
followed by gram pulse, blended tea, onion, black gram, gram flour etc.
In the last Ramzan, sugar was priced at Rs.18 per kg at retail levels
but this time it has crossed all the barriers, rising to Rs.29-30 per kg
Shortage of sugar production by at least 600,000
metric tons in the last season, late decision to allow import, rupee
devaluation against the dollar and hoarding by market speculators
resulted in the price hike by at least Rs. 10-12 per kg in the last 11
months. There is a possibility of the sugar price falling, as the cane
crushing by millers has already started in Sindh, while Punjab millers
are expected to fire their boilers from this week. Raw sugar has also
started arriving from Brazil which will be refined into white sugar. In
case sugar prices come down by Rs 2 per kg, then the buyers will still
have to pay Rs 8 to 10 per kg more to buy the commodity in Ramzan as
compared to last year.
Onion prices currently range between Rs.10 and Rs.12
per kg. It was selling at Rs.5 per kg in last Ramzan due to bumper crop
of Sindh. This year the crop, particularly from Balochistan and NWFP had
remained meagre. Consumers, all over the country, will have to rely on
Sindh crop in the upcoming month which means a price hike due to its
rising demand in Ramzan coupled with export to various Gulf and Middle
There is now a need to place a ban on the export of
onion for the time being in order to avert any crisis in the holy month.
In case, precautionary measures are not taken, the price of onion may go
beyond Rs.15 per kg.
Another burden on the consumers is the likely rise in
tea prices as leading tea packers have already jacked up the prices
ahead of Ramzan, Lipton Yellow Label 200 grams pack now sells at Rs.60
per pack as compared to Rs.50 per pack in the previous Ramzan and Tapal
Danedar 200 grams is now tagged at Rs.58 per pack as compared to Rs.49
per pack in last Ramzan. The packers used the same marketing technique
to fleece the consumers in the previous Ramzan by first raising the
prices a month prior to Ramzan and then giving a discount of Rs.2-3 per
pack. The same thing can happen in this Ramzan too and the companies
would announce a discount of a few rupees before fixing the new prices.
The third main item is the gram pulse which is
heavily consumed in Ramzan. Gram pulse crisis now already looms large as
its prices now range between Rs.30 and 32 per kg at retail levels as
compared to Rs.24 per kg in the previous Ramzan.
Gram flour (besan) now sells at Rs.32 per kg at
retail level as compared to Rs.26 per kg in the previous Ramzan. The
price of Kabuli Channa in the previous Ramzan was Rs.35 per kg as
compared to existing price of Rs.55 per kg. The black channa No. 1 and
No.2 qualities, were selling at Rs.24 and Rs.22 per kg but these items
are now priced at Rs.26 per kg and Rs.24 per kg.
A survey undertaken by Dawn, in Lahore, suggests that
the rates of vegetables have increased by 25-40 per cent compared to
last year because of increase in the cost of transportation, running of
tubewells etc. The increase has come because of the increase in
petrol/diesel prices. The free fall of the rupee is another sad story of
the ill economy. The rupee lost value by 12.5 per cent against the
dollar since July 2000.
Yet the government claims that inflation is under
control and prices of only few items have increased. Such announcements
completely ditached from reality, only add salt to the wounds of
distressed class of consumers. Even the governor State Bank, in his
annual report recently released, has conceded that official inflation
figures are loosing public creditability.
As far as unemployment is concerned, observations
suggest that the situation has deteriorated. No official figures are
available about this very critical indicator. The government is silent
on the issue as to how many new jobs have been created during the year.
Ironically, press reports suggest that the government is planning to lay
off more people. Will this help the economy to come out of the heavy
smog. Certainly not. The export or agriculture-driven growth is likely
to be mitigated by the heat of inflation, growing unemployment and
falling disposable income of spenders, not to mention the hard-hit
segments of the population — the salaried class and the poor.