Recipe for inflation

AS if people were already not used to a hike in prices, the government increased oil prices across the board, with the benchmark motor spirit going up Rs 6.10 to Rs 71.21 per litre, while diesel, used for transport especially by the poor, has gone up to Rs 61.07 per litre, while kerosene, used extensively as a cooking fuel, has gone up to Rs 64.07 per litre from Rs 60.75. These increases are inflationary, but inevitable under the agreements made by the government with the IMF to obtain its support for its foreign exchange liabilities. At the same time, as this latest hike hit the consumer, he was already dealing with increases in gas and electricity charges. All of these are inflationary not just because of their direct impact, but because of the pass-through effects. One result has been to make Pakistani exports uncompetitive abroad, at the very time Pakistan most needed the foreign exchange, and when the global economic crisis has reduced the capacity of Pakistans traditional importers to buy. In short, the IMF, instead of concentrating on making the economy more competitive in a more hostile marketplace, is doing just the opposite. At the same time, the government is preparing to conduct another poverty survey for the Benazir Income Support Programme, in all four provinces, Azad Kahmir, and Gilgit-Baltistan, where three districts each have been surveyed, with a view to extending the reach of the programme from the present 2.2 million people to seven million in the next two years. The survey will cover another 20 districts, starting from this month, and going up to June. This survey raises the question of why the government is carrying it out when it is itself the biggest cause of poverty. Unless it wishes to know how successful it has been in driving people into poverty, there seems no reason to conduct such a survey, not while the programme is being used to provide a subsidy at the taxpayers expense to the ruling PPPs cadres, and thus needs no survey to be conducted. If the government was to stop its anti-people policies, foisted upon it by the international community through the IMF and its onerous conditionalities, there might be some point in a poverty survey, but at present, the government can only try to avoid budget deficits. The main reliance for this should be on avoiding wasteful expenditure, especially on the army of ministers that is there, not on imposing taxes or raising prices of basic commodities, especially of fuel used by poor people or in producing commodities they use. And there is no solution in conducting surveys of any kind, not even of poverty, which would be rendered redundant if the correct policies were followed. The government must break free of the IMF if it hopes to follow policies which build the nation, not destroy it.

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