LAHORE: The drastic measures that the central bank is adopting to check imports are the result of earlier ill planning when imports were allowed liberally. Similarly, delay in increasing interest rates would also result in drastic measures in the end.
We are celebrating the fact that the petroleum rates in Pakistan are lower than many countries. What is there to celebrate?
We are promoting consumerism by keeping petrol rates relatively low when compared with the increase in crude oil rates globally. Our petrol consumption is constantly increasing, while in countries where the prices are high have seen decline or stagnant imports.
The day is not far when the government would be forced to increase petroleum rates drastically or ration its use. We are a resource starved country and we cannot take public appeasing measures on borrowed money.
There are avenues where the prices could be controlled through strict adherence to rules and accountability of all those that deviate from rules and regulation. Increase in petroleum rates cannot be criticised as long as the government increases them in line with global rates of this commodity. However, increase in power rates carries a big question on the competence and corrupt practices prevalent in the power sector. The PM is not fully aware of the reasons for the losses.
He has stated after opening the Multan-Matiari transmission line that the line losses would come down from 17 percent to only four percent. The transmission losses are not so high.
These range from 2-6 percent depending upon the efficiency of the transmission system. The less are distribution losses that in fact relate to power theft at various levels.
Moreover, total power distribution and transmission losses are over 18 percent and not 17 percent. The power sector at current tariff would be awash with money If the distribution losses (relating to theft are cut and full recoveries of the billed amount) is achieved.
This government, like its predecessors, has done nothing in this regard. We are paying a huge cost for the corruption and inefficiency in this sector.
High power tariff increases the production cost of all industries. It forces the households to cut more essential expenses to ensure timely payment of bills.
All these difficulties are for the honest industrial, domestic and commercial consumers that are in majority. The minority that steals power with the connivance of state officials not only operates comfortably, but their power consumption is also very high since they pay a fixed amount to the corrupt officials and get a bill that is 20-50 times less than their consumption.
The transmission lines would stop outages to a large extent, but one should not expect any significant drop in line losses.
Reducing corruption and improving efficiency is a more public appeasing measure than doling out subsidies. The power theft alone if stopped would finance two times more subsidies.
In the same way, eliminating corruption and incompetence in the public sector enterprises could unleash high GDP growth in the country. The most painful aspect of corruption in Pakistan is that even the head of the government concedes that corruption and cartel mafias are impeding the well-being of Pakistan.
What is stopping them to take action against them? Why can’t the accountability watchdog be unleashed on the corrupt? But then, one would require appointing an accountability head, who is a person of integrity both in monetary terms and in morality as well.
The rupee is in free fall, the stock market has almost crashed, the prime minister assures of taming inflation, while the government takes all measures that are inflationary. These are fundamental economic issues that must be resolved before we could assure our people of good times ahead.
A government that changes its basic policies frequently cannot be expected to instil this confidence. The economic planners must realise that the discontent in the society is rising.
Discontent reduces the urge to work. People pay more attention towards generating money from avenues where they are not required to work.
Discontent has also increased criminal acts. The cases of phone snatching, car and bike thefts have increased even in cities where technology has been installed to monitor activities on roads and in neighbourhoods.
Crimes against women have reached new heights. Consumers that paid their bills honestly are contacting linesmen to provide them a way out.
Gas theft has increased. Positive activities are on decline and people are increasingly looking for shortcuts to become rich. This was bound to happen as we are a society where the unemployment ratio of the educated population is 24 percent as disclosed in a recent briefing in the senate.