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April 20, 2021

A different consuming culture

Business

April 20, 2021

LAHORE: Lowering the prices of daily use items through subsidies is only a public appeasing measure that rarely helps the poorest segment of society that mostly buys food on a daily basis.

Consumers would continue to suffer until the rates of essential items are brought down through better governance and elimination of cartels. The subsidy is usually provided at the 5,000 Utility Stores outlets spread all over Pakistan. Every item is supplied in packed form. It does help the lower middle class and affluent consumers but is of little use to the 30 million poor.

Lower middleclass consumers can afford to buy items in bulk that could last for at least a week. One of the family members has to spare 4-6 hours a week to procure subsidised grocery at these outlets. Assuming that each of the 5,000 outlets remains open for 14 hours and serves 1,000 customers the total number of consumers served in a day would be 500,000. To serve in this number would require highest efficiency. There is only one billing counter at these stores and it would require the cashier to roll out a bill every 90 seconds.

There is a different buying culture among the poor consumers and daily wagers. They buy essential items on daily basis. The daily wagers particularly could feed their families properly when they come back from work with their wage. The family semi starves if he/she could not find work on some days. From the paltry amount they earn they have to keep some amount for the house rent, utility bills as well.

So instead of buying one kilogramme sugar, pulses or oil they buy half kilogramme or even less from the neighborhood store. They buy 1 kilogramme wheat flour or half kilogramme low-cost rice and these packings are not available at the Utility Stores. Those earning minimum wage get the facility of credit from the store owner and pay when they receive their salary.

The Utility Stores are of little use for the actual poor of the country that really need state help.

Industrial and trade policies formulated to appease the investors tend to neglect the consumer rights in all developing countries including Pakistan as a consequence the consumers bear the burden of higher prices.

Though industry and business in Pakistan are operating under the principle of open market economy, the consumers however remain at the receiving end due to weak state regulations and unholy cartels. There is no effective consumer protection institution in the country. There are no effective consumer protection laws either.

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, etc now register a regular increase. A new entrepreneur class has emerged that engineers 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 over-supply situations through their respective associations and maintain higher prices that ensure them high profit. Because of cartelisation, along with the most efficient, the most inefficient manufacturers also remain in business as their associations determine retail prices in a way that ensures the viability of the weakest producer.

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

Substandard candies and chocolates are openly sold in the market. The regulation of fares in public transport is lopsided. 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.

In the third Covid-19 wave the Utility Stores have become the spreading grounds for deadly virus. Corona safety measuers are not followed in queues or rather crowds outside these stores.

Only a selected number of customers are allowed inside the stores and when they are done the next in line is allowed in. They do not maintain the distance required under SOPs (standard operating procedures) in these queues.