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The hard-hit segments of the population are the salaried class and the poor

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 levels.

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 currently.

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 Eastern countries.

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.