Subsidising Wheat

The wheat price situation in Gilgit-Baltistan perfectly reflects the larger problem of fiscal policymaking and economic man­agement on part of both federal and provincial governments. The government has already been roundly criticised for the deci­sion to distribute free wheat flour in Khyber Pakhtunkhwa and Pun­jab. It is clear that this is a populist decision meant to appease vot­ers ahead of the elections, whenever they take place.

The government has received a lot of justified criticism against its economic policymaking, and the overreliance on subsidies—many of them untargeted—during a record-breaking period of financial crunch has been deemed unwise by many experts. In Gilgit-Baltis­tan, the provincial government has already spent the allotted Rs 8 billion for this subsidy, and not rationalising the wheat price would now be tapping into funds that the government does not have. This money has only managed to procure 90,000 tonnes of wheat for GB due to the increased prices seen this year.

There is no denying that the situation remains critical and sta­ple items such as wheat have seen inflation that has made it hard for the average citizen to afford them. However, with the IMF pro­gramme hanging in the balance and the government coming up short on multiple counts while it struggles to unlock the funding, it is clear that untargeted or ill-advised subsidies are not the answer to our problems. This is added to the fact that it is virtually block­ing Pakistan’s access to IMF funding, which itself is tied to all other forms of bilateral and international aid and loans.

The best strategy at this point would be to continue the targeted subsidies in the form of cash grants, while procurement and market management should be left alone for now, as this is not something the state can afford. The Gilgit-Baltistan government must finally take the critical decision of rationalising prices in the market for wheat.

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