Pakistan’s relief package is a step in the right direction but allocation of funds is not enough

The government’s monitoring mechanisms must act with increased vigilance to make sure no relief is wasted on unscrupulous individuals.


May 30, 2022

ISLAMABAD – FROM here on out, the incumbent government will be walking a tightrope. With painful measures inevitable to fix imbalances in the economy, it will be up to Finance Minister Miftah Ismail and his advisers to make sure they protect the citizenry as best as they can from the coming wave of inflation.

In this context, the relief package announced by the prime minister late Friday night seems to be a first step in the right direction. Pledging a sum of Rs28bn to help the most vulnerable segments of society absorb the impact of increased fuel prices, the prime minister hopes to protect about a third of the total population with a per-family grant of Rs2,000 for 14m lowest-income households.

He has also announced the provision of subsidised wheat through the Utility Stores Corporation to address the risk of people going hungry as the knock-on effect of high fuel and electricity prices starts rippling through the economy.

Mere allocation of funds, however, is not going to be enough. The prime minister should be ready to take strict measures where necessary. The sum pledged for the fuel support grant as well as the subsidised wheat being provided should only go to the people who deserve it. The government’s monitoring mechanisms must act with increased vigilance to make sure no relief is wasted on unscrupulous individuals. The budget for the next fiscal year will be a tough one for the finance minister, but he must strive to protect as large a segment of the population as possible.

This should mean not placing any additional burden in the form of increased income taxes on low- and middle-income households, which he has promised to avoid. The government should, however, also carefully calibrate indirect taxes, especially on commonly used goods. The salaried class and pensioners are already hurting from wave after wave of inflation unleashed by both domestic and international factors. They should not be squeezed further.

If Mr Ismail wishes to free up the government’s revenues, it would be wiser for him to cut the dole for industries and enterprises that have continued to benefit from uncompetitive and unaffordable subsidies. He should also reassess how fairly the businesses and industries that have done well over the past few years have contributed to the national kitty.

Over the past year alone, trends in the real estate market and data on sales of automobiles have suggested that a considerable amount of money is circulating in the local economy. Wealth cannot be allowed to continue to pass between the hands of a few as the vast majority of the populace suffers the impact of decisions taken for the former’s benefit. It is the surest way to foment even more social and political unrest, which Pakistan cannot afford in times like these. Economic justice has to be done.

Published in Dawn, May 29th, 2022

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