KARACHI: Pakistan’s current economic crisis has caused the highest price hike of daily use items first time in Karachi history since the establishment of Pakistan. The country’s maximum annual inflation rate rose to its peak level of 12.55% this year as compared to last year’s 6.78% peak level, which was eight-year high since June 2011. The unemployment rate has also gone high to 6.1% so far as compared to 3.04% last year and is expected to rise by 6.2% in 2020, according to an investigative report made under a fellowship organized by Pakistan Press Foundation.
The investigative report by journalist M Nawaz Khuhro said that the transport fares and prices of vegetables and other food items in retail market rose sharply in Karachi and other parts of the country soon after gas and oil prices were jacked up by the government.
Comparing regionally, Pakistan’s 6.1% unemployment rate has turned higher than that of India (2.6%), Bangladesh (4.3%), and Sri-Lanka (4.4%).
Pakistan Economic Survey 2019 says the fiscal year 2018-19 witnessed a muted growth of 3.29 % against the ambitious target of 6.2 %. A latest World Bank report Oct 2019 says Pakistan’s Gross Domestic Product (GDP) growth slowed to 3.3 percent in FY19 with a 2.2 percentage points decline compared to the previous year.
The State Bank of Pakistan’s data shows the government’s domestic debt and liabilities increased to Rs 23,164 billion by 30 September 2019 from Rs17,004.7 billion in June 2018 while its external debt and liabilities rose to US$106,891 million by 30 September 2019 as compared to US$96,111 million by 30 September 2018. This burden will cause trouble to the economy of the country and people in the future.
The prices of daily use items in Karachi recorded a historical high during June to November 2019 as compared to same period last year.
Vegetable prices: The maximum highest vegetables rates per one kg in retail market rose as following: lady finger rate rose from Rs80 to Rs140, tomato from Rs50 to Rs 320, brinjal from Rs40 to Rs 70, cauliflower from Rs 60 to Rs 140, bitter melon from Rs 70 to Rs 140, round melon (Tinda) from Rs 50 to Rs 80, Palak from Rs 40 to Rs 100 and potato from Rs30 to Rs 40.
Food items: Wheat flour per kg rose from Rs 40 to Rs 60, cooking oil by 50 %, pulses from Rs130 to Rs200 and tea rose Rs200 per kg.
Transport fares: bus and taxi fares rose by Rs50%, rickshaw by 25% and goods transport by 60%.
Fruit prices: As per kg, apple rate rose from Rs120 to Rs180, pomegranate from Rs120 to Rs200, kinnow green from Rs80 to Rs 150, grapes from Rs 200 to Rs 300, melon from Rs50 to Rs100, water melon from Rs80 to Rs120, peach from Rs180 to Rs250 and banana per dozen from Rs50 to Rs70.
Other items: Washing powder per kg rose by 50%, a 13-liter can water rose from Rs20 to Rs25 while bottled water per liter witnessed 10% hike. A small water tank value rose from Rs400 to Rs700.
In an interview, Joint Director of Pakistan Institute of Labour Education and Research (PILER), Zulfiqar Shah, said the present economic crisis had badly affected common people, particularly working class. He said since the PTI government signed the $6 billion economic program agreement with IMF, rupee had devalued over 30 percent and fiscal deficit rose as high as at 7.4pc. These bad economic indicators coupled with unemployment and low wages had severely affected workers, he said.
In an interview, Sindh Agriculture Research Council (SARC) senior vice president Jamal Mahmood said that the current economic crisis had badly affected agriculture sector, which is the mainstay of Pakistan. He said that due to economic slowdown, pesticide rates had soared by 40% while rates of main fertilizers – DAP and urea – had jumped by 44% as compared to rates of the PML-N government over a year ago. Jamal said that the rates of diesel used in water extricating generators had shot up to Rs130 per liter as compared to last year’s Rs75.
In an interview, Home Based Women Workers Federation (HBWWF) general secretary Zehra Akbar Khan said that current economic crisis had affected 50,000 home-based workers in Sindh as most of them had become unable to pay the rent of their houses and cannot afford education of their children. The value of minimum wage of Rs17500 has drastically come down as compared to prevalent price hike caused by dollar value hike and IMF-favored policies implemented in Pakistan.
In an interview, a security guard, Abdul Rasool, with Rs18,000 salary, said his family had badly been affected by the price hike. He said that his family had been compelled to have low priced food and tea for the first time in the history of Pakistan. Rasool says we, six family members, used to make tea with Rs50 milk, but now we have been forced to make tea from Rs30 milk.
Coping strategies: The investigative report says there is dire need to devise effective coping strategies to pull the country out of the worst economic crisis.
In an interview, President, Karachi Chamber of Commerce and Industry (KCCI), Agha Shahab Ahmed Khan said Pakistan needed to focus on E-commerce, especially B2B ecommerce to increase exports.
He said that China was moving towards producing higher value added goods and was looking to move a portion of its manufacturing sector to other developing countries. Pakistan must try to get as much of China’s relocating manufacturing as possible by setting up joint ventures with the Chinese under CPEC. More work in needed on Ease of Doing Business so as to attract foreign investment, he said.
To bring stability to the exchange rate, Pakistan needs to reduce its trade deficit. Pakistan also needs to lay extra emphasis on import substitution as unnecessary imports at cheap tariffs have caused enough damage to the local industry, he said.
He said that the country’s services sector also needed to focus on exports and search for other avenues apart from the IT sector. Pakistan also needs to encourage formation and proper functioning of skill development institutions. Regional competitors have systematically developed the skill levels of its human resource leading to a sustained growth in exports and enhancement of value addition levels in the production chain. Pakistan also needs to pursue a similar level so that its exports, domestic commerce, productivity and employment levels increase substantially, he said.
Agha said to improve the business sentiment, government needed to make business and trader friendly policies that focus on reducing the cost of doing business and the trust deficit between the business community and government institutions such as NAB and FBR. The conversion of FBR to Pakistan Revenue Authority should not just be a change of name but it should be an actual change of mindset, with reforms to continue unabated, Agha concluded.
The investigative report said that there was dire need to devise effective coping strategies to pull the country out of the worst economic crisis by establishing own industries for manufacturing computers, mobile phones, cars, buses, coaches and other vehicles because much of the national income goes to foreign countries for purchasing these items. Exports should be enhanced by searching new markets in foreign countries for Pakistani goods and this could be achieved by providing more incentives and facilities to the exporters.