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Society GROWING UNEMPLOYMENT, INFLATION AND POVERTY
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SOCIETY

GROWING UNEMPLOYMENT, INFLATION AND POVERTY

Despite all tall claims of improvement in economy, the fixed income group, salaried class and the common man has received no relief

From SHAMIM AHMED RIZVI
Islamabad
June 10 - 16, 2002

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.

This is a fact that despite all rhetoric and tall claims of improvement in economy, the fixed income group, salaried class and the common man has received no relief. Instead they have been burdened with constant periodical doze of hike in the prices of utilities with its adverse effects on cost of living. Electricity tariff has been raised by over half a dozen times and gas and petroleum products on over five accessions since this government took over in 1999. In May 2002 alone the prices of electricity and petroleum products were revised upward twice. Now there are reports that the prices of oil, gas, electricity, telephone are likely to go up by 5 to 20 per cent in the next budget.

It is a harsh reality that the silent majority which Gen. Musharraf claims to be his supporters have been treated most callously by the present government. The people are loosing patience and now widespread resentment is gaining ground against government policies allowing increases in the tariff of utilities like gas, electricity, petrol and telephone charges. This has partly led to increase in the prices of large number of essential food items making the life of common man more miserable during the past two years. The agony of this scenario has been multiplied by the onging exercise of downsizing in almost every government and semi-government organization where again the majority of the victims belong to lower classes.

Anger is brewing up slowly amongst the poor and lower middle classes who were in the forefront to welcome the new government from whom they expected some relief for those who were finding difficult to survive in their honest income. Even Nawaz Sharif government was scared of public reaction and hesitated to allow increase in prices of petrol and gas, levy of GST on electricity bills, increase in local call charges and line rent which directly hit poor and lower middle classes. All these unpopular decisions have been taken by the present government which thinks itself immuned from public reaction.

As against this government has found many reasons to be soft on bank defaulters and holders of tax evaded black money in billions. Government whitened black money to the tune of over Rs. 100 billion against a payment of just 10 per cent while honest tax payers had been paying upto 25 per cent of their income as taxes. Bank defaulters are being treated softly because of the consideration of revival of economy. Wealth tax has been abolished altogether to favour the moneyed class. As against this rates of profit on small savings has been reduced by over 25 per cent from 17/18 to 12/13 per cent during the last one year. As a result, hundreds of thousand of retired and old people who are living on the profit of their life long savings have been subjected to untold misery as their monthly income has fallen by about 25 per cent while the costs of living is constantly on the rise. Adding salt to their wounds these people are told that it was necessary to reduce the rate of profit on their savings as the government was keen to advance loans to industrialists at reduced rate of interest to promote its economic revival programme.

The poor and the salaried class was getting buried under the heap of rising cost of utilities, and direct and indirect taxes, which have left substantially less to pay for eatables, education, healthcare, clothing, etc. Amid rising cost of living and increasing unemployment those who were unable to bear the burden, either committed suicide or were being sucked into criminal activities. Many of the low-income families have withdrawn their children from educational institutions.

The government has embarked on a vigorous programme to increase its revenues to meet its ever-increasing current expenditures. It is looking into every aspect of public life to explore new venues that could produce more revenues through new taxation. The public has no escape but to submit meekly to the wishes of a voracious administration.

The successive government have utterly failed to fill the gap between revenues and expenditure. More taxation is not the answer. People are already overtaxed. Any more taxes or hike in prices would cripple them economically and the government would be left with holding tax notices but no taxpayers.

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 losing 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 last two years. 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.