Consumerism in crisis as pandemic wreaks havoc

LAHORE: Some pseudo economists are equating over Rs150 billion doled out to the poor as influx of capital that generated economic activity. They conveniently forget that the amount was basically provided to partially cover their food expenses up till September.

Around two million jobs have been lost because of pre-pandemic poor economic performance and then devastation caused by Covid-19. This was a necessary humanitarian intervention and the government should be commended on this step.

However, it does not in any way mean that it created any consumptive activity outside food and essential items. People did not buy motorcycles, television sets, new clothing or any electronic gadget. The poor procured food from this assistance.

They have been told that no more assistance would be available to the beneficiaries till September this year. Moreover, the amount has been distributed over a period of three to four months and influx of capital if any is not more than Rs40 billion per month.

Ehsaas programme is an extension of BISP that was already providing Rs110 billion annually to the poor. Had these people not lost their jobs they would have earned much higher amount.

This subsidy will only partially mitigate the miseries of the poor and will not in any way create any economic activity. Subsidies even otherwise are not suited for economic growth. In present case it was a necessity because of unusual crisis.

Our industries and commercial organisations are still not operating on even half the capacity. Only few of those that lost their jobs have been able to get reemployed after easing of lockdown.

Another rent seeking avenue has been created for firms and factories as the officials “check” only those premises that do not grease their palms. The market and industries try to observe SOPs because they are afraid of electronic and social media if they violate SOPs. Factories and commercial organisations are operating with truncated staff to ensure that proper social distancing is maintained. Most of them are not pushed to operate with full strength as the uptake of almost products and services have not yet picked up.

Consumers have become very conservative. They are holding on their buying wish list as most of them have seen their incomes decline. Sanitizers and face masks are not essential items of their monthly budget and it costs money. Since socialisation has come almost to halt there are no parties and hence no new dress to be arranged.

Schools are still closed and the parents have to make efforts to keep their children positively engaged. One cannot blame the government for current Covid-19 fiasco. It has tried to open as many job providing avenues as possible. It has not taken the risk of allowing the restaurants to operate.

The marriage halls remain closed so there are no mega functions. Workers related with these professions have lost their jobs. In other countries even in India e-commerce was already developed. During the period demanding social distancing the sales through online platforms gained momentum.

In Pakistan, there were very few online shopping avenues. The big brands did offer goods through e-commerce and were usually reliable suppliers. Smaller suppliers were not reliable as the products they offered online were not in conformity of the standards declared by them. This impacted the penetration of e-commerce in the country.

It was after long lockdown that many retailers offered products online. Consumers still are doubtful. Now some suppliers have given the option to the buyers to first examine the goods they receive and after satisfaction make the payment.

Earlier, the buyer has to first make the payment of the parcel and then fume if the product supplied was not up to the specification. This new approach has instilled confidence among buyers. It is worth noting that consumers in Lahore place online orders to suppliers as far back as Sadiqabad or Bahalwalpur.

This online trend would make a big dent on the sales of retail stores. The products are of quality and cheaper than the big brands. The next step would be for the suppliers to offer buy back guarantee of the products they supplied online. This is in vogue in all developed economies.