Looking at the essential ingredients of an effective price control system
Everyone has been forced in recent days to pay attention to the inflation in view of the drastic surge in the prices of almost everything. Many segments of the society are panicking. The governments, federal as well as provincial, have vowed several times, in the last couple of months, to bring down the prices of essential commodities to provide relief to the common man. Strict administrative measures have been hinted at. The task is gigantic and there are several administrative and political challenges on the way to putting a halt to the persistent rising trend in prices.
Price control is clearly part of the government’s mandate. Governments have traditionally set the minimum or maximum prices for specific goods (as required by the circumstances) to ensure the affordability of essential items for vulnerable consumers on one hand and their producers on the other. Appeals to the government are therefore understandable and normal.
The standard approach to price control requires firmness at two levels; an effective district administration and a strong political will. The government has now announced a price emergency in the country and urged the civil administration to take all possible measures to provide relief to people on this account.
The part played by the civil administrations, in this regard, starts at the level of price enforcement magistrates. Usually, the authority is given to ACs (assistant commissioners), ADCs (additional district controllers), and tehsildars (revenue officers). Additionally, district heads of other departments who are in the 17th grade or above are sometimes nominated by the DC (deputy commissioner) and notified by the Home Department as price magistrate(s). These officers are typically drawn from Agriculture, Food and Livestock Departments.
It is important here to understand the price fixation mechanism. The key office in this regard is that of the Industries Department district officer. One of his duties is to gather daily data on prices of food items from the nearest wholesale market and present it to the DC. Making allowance for carriage charges and a small profit for the retailer, the retail price is fixed by the administration. The most important part of this process is the display of the ‘price list’ at every retail outlet.
Prices are usually fixed on a monthly basis. However, of continuous fluctuation in the prices of some items like sugar and pulses have forced some districts recently to revise the prices biweekly. “We have taken on board all the traders’ unions in the district. They have agreed to display price lists at their shops. This encourages consumers not to pay more than the fixed rate”, Hafizabad DC Chaudhry Naveed Shahzad tells TNS.
Nonetheless, there are frequent complaints by the public that traders do not much care about the displayed prices and demand prices fixed either by individual shops or by a market. Most consumers do not lodge a complaint against them believing that strict action will not be taken over such violations.
Shahzad says he has come across most of such complaints in rural areas. He puts this down to logistics, saying price magistrates are sometimes unable to visit the markets frequently enough to deter such behavior by vendors. “The government has introduced an App called QeematPunjab App and a UAN where consumers can lodge complaints either telephonically or by mail. The administration has to respond to each complaint”, he says.
TNS learnt from officers aware of the situation that some districts are facing severe manpower shortages at the administrative level responsible for keep prices control. Earlier, an AC would have five or six magistrates at his disposal, now there is none as this cadre has been abolished. Around 40 percent of the approved slots for patwaris in the Punjab have been vacant for several years. A proportionate number of posts for naib tehsildaars and tehsildars are also vacant.
Senior officers say firefighting is going on without any permanent solutions being in sight.
Qazi Ahmed Akbar Khan, a spokesperson for the Punjab government, says that the district administration is working efficiently to keep the prices under control. “After having imposed the price emergency, the provincial government has allocated various districts to provincial secretaries and ministers who regularly visit the respective areas. One of their jobs is to keep a strict check on prices and ensure that price lists are displayed at every retail shop. A grading system has been introduced for district administrations so that if a district administration is not doing its duty under this mechanism, action can be taken against the concerned authorities”, Khan says.
The government has set up Sahulat Bazaars in every district. The number of these bazaars varies from 8 to 60 considering the population. Khan says all food items, perishable as well as non-perishable, are available at these bazaars at wholesale rates.
Some analysts point out that a strong political will is as important to keep the inflation under control as an effective and well-resourced civil administration. Dr Hassan Askari Rizvi, the former caretaker chief minister of the Punjab, says the primary mechanism to control price hike is missing in the current administration.
“Primarily, it is the ministers for Food, Agriculture, Livestock, and Local Government Departments who set up a mechanism to keep prices of food items down and the supply of food items running without any glitches. Most importantly, the office of the chief minister ensures coordination with the relevant departments. Sadly, most of the important administrative links are missing in the current political administration”, Dr Rizivi tells TNS.
There is another, though unavoidable, phenomenon associated with the approach of strict action against the surge of prices of food items. Some experts consider that efforts to control prices alone are mostly effective over on an extremely short-term. Over the long run, price controls inevitably lead to shortages, rationing, deterioration of product quality, and black markets that arise to supply the price-controlled goods through unofficial channels.
Mian Nauman Kabir, the Pakistan Industrial and Traders’ Associations Front chairman and a former provincial minister, says that no government, either provincial or federal, is seriously trying to take all stakeholders on board to achieve the goal of price stability. “Without a sound transparency mechanism, an effective system of monitoring, proactive price control committees and strict punishments, no substantial relief can be brought to people”, Kabir warns.
He adds, “Unfortunately, the present political team is incompetent. They cannot bring all stakeholders together.” Making promises is not going to be enough to reduce inflation; a strong political commitment is needed, he says.
The writer is a staff member. He can be reached at [email protected]