Organised exploitation

September 23, 2020

LAHORE: Though Pakistan is operating under the principle of open market economy the consumers at large, however, always remain at the receiving end due to weak regulations and unholy cartels that...

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LAHORE: Though Pakistan is operating under the principle of open market economy the consumers at large, however, always remain at the receiving end due to weak regulations and unholy cartels that thrive in such environments.

The absence of state writ has given free hands to the price manipulators. Consumer exploitation by the entrenched entrepreneurs has reached a level that rates of most items do not retreat even during extreme recessions in the country when supplies are higher than demand.

The principle of supply and demand no longer applies. When demand is high the prices naturally increase but when the supplies are high the vested interests suppress them by withholding production or hoarding the stocks to create artificial shortages and keep the rates high.

Industrial and trade policies formulated to appease the investors tend to neglect the consumer rights in all developing countries including Pakistan therefore the consumers bear the burden of higher prices. State-entrepreneurs alliance has become lethal for the consumers as the country’s GDP cumulatively grew at only 1.5 percent (1.9 percent 2018-19 and -0.4 percent in 2019-20). In low growth that does not cover even the annual population growth, the wages have frozen or reduced.

The supply of workers is high and the availability of jobs is very low. Here the principle of supply and demand is adhered as it benefits vested interests.

There is no effective consumer protection institution in the country. There are no effective laws for the same. There is no check on irrational increase in prices.

The rates of milk, wheat flour, vegetables, pulses, edible oil, mutton, beef, chicken meet, egg, tea, now register a regular increase.

A new entrepreneur class has emerged that engineer the rates of most of these commodities through hoarding.

The better-organised sectors like flourmills, ghee manufacturers, and sugar producers, manage to shield themselves in oversupply situations through their respective associations and maintain higher prices that ensure them high profit.

Most of the food-related industries are catering to the local needs only, yet their production capacities are higher than the local demand. They have no export market but even then, they have registered mushroom growth.

The flourmills have the capacity to produce at least three times the wheat flour needed in the country yet there is no competition between them. The efficient and inefficient flour mills are thriving because there is no competition between them.

Similarly, the most efficient and the highly inefficient, sugar mills, edible oil units are in business because the retail rates are determined in such a way that ensures the viability of the most inefficient producer.

The consumers in Pakistan pay more for electricity because the government agreed to unrealistic high payments to the independent power producers.

They are forced to absorb the high electricity losses that are included in cost and occur either due to corruption or inefficiency of power distributors.

Health services in the country are exorbitant as the government fails to enforce transparency in the public sector health center and due to its inability to regulate the private sector. The operation costs in heart or orthopedic surgeries are 10-50 times higher in private sector than public sector hospitals. The rates of medicines in Pakistan are irrational due to overregulation by the health ministry. Rates of relatively common and cheaper drugs are low, while the rates of third-generation medicines are out of reach of common man.

Substandard candies and chocolates are openly sold in the market. The regulation of fares in public transport is lopsided. The auto rickshaws and taxis operate without meters that are fixed by the government to charge the approved per kilometer fare.

The institutional weaknesses of regulatory bodies and corruption encourage exploitation of consumers. The benefits accrued from sales during short supplies are rarely depicted in their tax returns. This shows the lethargic attitude of our tax authorities. Vigilant tax machinery could keep track of price fluctuations in high demand cycles and match the sales values declared in the tax return by the manufacturers and distributors during that period. Sure, this would not provide any relief to the consumers, but the government would at least earn higher revenues that could be used for welfare of the people.

This government is talking about revival of growth after taking it to rock bottom in two years. However, the policies it has been pursuing are anti-consumer. There is no likelihood of prices coming down as price manipulators are part of the government as has been revealed in reports prepared by the commissions appointed by this government.



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