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Tuesday June 25, 2024

Diminishing values

By Mansoor Ahmad
September 22, 2023

LAHORE: The path to economic recovery and minimising human suffering in Pakistan that is plagued with weak institutions and corruption requires a multi-faceted and sustained effort over the long-term, a glimpse has been seen in recent actions of the state.

Corruption and wrongdoings can be handled smoothly if the law is strictly applied and law brokers and their abettors are promptly punished. In the presence of technology it is not possible to bypass rules and regulation. But if the implementing authority ignores the rules and watchdogs sitting over them choose to remain silent, we can say goodbye to transparency and fair rule. The state must show strong will to implement good rule based practices.

The current action against dollar speculators, hoarders and manipulators has proved that where there is a will there’s a way. The institutions or individuals that were abetting dollar outflows are now taking actions against the culprits.

They know the loopholes in the system and let the culprits benefit from them. But now with the sword of powerful higher-ups hanging over their heads, they managed to control the slide of the rupee in a day and this has continued in the second week.

This means the system has the ability to regulate money changers and unlicensed dealers, but they did not take action earlier because they were also the beneficiaries. The stick now should be converted into a rule of law, and deviation from rules must be made a punishable offence.

The case of currency is not a one of matter, but we have seen the same pattern in the power sector where power thieves are being apprehended on a daily basis. Here the theft is institutionalised and needs concerted efforts to weed off corrupt staff and the powerful thieves.

Same action has started against those who pilfer gas and culprits are caught red handed again on a daily basis. We need action against hoarders, water mafia in Karachi and in scores of other sectors.

In recent weeks we have seen the resolve of certain agencies to curb malpractices with an iron hand. Corruption can be eliminated by strictly applying the rule of law, as well as by using force.

Unfortunately, actions against corrupt practices in Pakistan show positive results only when force is used. The same results can be achieved by strict adherence to the law without fear and favour. We may need to change a few rules or anomalies in law that allow the culprits to escape through courts.

If it is proved through technology that law was broken by a party or a bureaucrat there should be no escape. If the courts think that a matter needs more clarity, it can suspend proceedings for a while, but the stay order must not go beyond one week. Cases pertaining to tax evasion and duties should be decided in three months after going through all appeals. The way we delay the cases of fines, penalties and defaults go in favour of culprits.

Take for instance the fine of Rs7 billion imposed on the cement sector by the Competition Commission of Pakistan almost two decades back when a cement bag was retailed at Rs165 and dollar was valued at around Rs64.

The fine two decades back meant the penalty was equivalent to the cost of 42.5 million cement bags. Now the price of a cement bag is Rs1,200 and the fine has been reduced to the cost of 5.83 million bags. In case of fine in dollar terms, the fine two decades back was equivalent to $1.09 billion. At the current dollar rate of Rs294 the fine is drastically reduced to $230.81 million.

We can see that those penalised have increased the price of their commodity in line with the appreciation in dollar value, but they do not push for early hearing of their case because the fine is diminishing with the passage of time passes both in terms of retail value of cement bags and in terms of dollars.