Incident 1: I had gone to buy some cashews and almonds from my favorite dried fruit shop in a major shopping mall. The owner came up to me and began narrating his rather sad story of declining...
Incident 1: I had gone to buy some cashews and almonds from my favorite dried fruit shop in a major shopping mall. The owner came up to me and began narrating his rather sad story of declining revenues. I was surprised to find out that his daily sales were like Rs200,000 a day a mere eight months ago. Current sales: Rs70,000 a day. That’s a drop of 65 percent.
Incident 2: I was at a wedding function in a five-star hotel when the head bearer walked up to me. His major complaint was his electricity bill of Rs6,000. He said that after paying his gas and electricity bills his disposable income has gone down drastically. Next month, he said, he may only be able to pay either his electricity bill or the school fee for his children.
Incident 3: Walking out of the hotel the valet service attendant grabbed my attention. He claimed that his take-home is Rs22,000 and that he has received an electricity bill of Rs5,900. I told him he must have consumed three to four hundred units. The poor guy told me that he only has two fans, a fridge and a few tube-lights – and that he only allows the use of the pressing iron two days a week. My question: How can anyone be expected to pay more than 25 percent of his or her salary to the electricity company?
Incident 4: I have been going to the same barber’s shop for the past decade. He had two problems: His business was sharply down and his electricity bill was Rs9,000. “What do you mean”, I said, “have people stopped getting a haircut?” He said that people who used to get a hair cut every five weeks have now started delaying it to the tenth week – so his business is down 50 percent. And the electricity bill is up by a hundred percent; he lived in a joint family household.
Incident 5: The car mechanic said that he used to service seven to nine vehicles a day. He claims that he is down to three to four vehicles a day. I said have people stopped getting their engine oil changed? He said he had a staff of five, three have now been fired.
Incident 6: The photo-copy shop owner claimed that he was a qualified accountant and has been running a successful business for the past decade. He claimed that his revenues were down 50 percent and that his expenses were up 50 percent. He said that he has laid off four of his seven employees and is still not being able to make ends meet.
Incident 7: The meat shop owner in an affluent neighborhood shared a very different experience. He said that several of his old clients come in and stack up their regular meat shopping in front of him. The meat shop owner then adds up and prepares a receipt. A number of his clients look at the receipt and then begin returning almost half of what they had originally intended to buy. Remember, this is happening in an affluent residential area.
We are stuck in a vicious cycle where disposable incomes are dropping, interest rates have more than doubled and corporate profitability is sharply down. This is stagflation – high inflation combined with high unemployment. The government must break this cycle.
The writer is a columnist based in Islamabad.
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