'Government must rein in inflation to stabilise economy'

The Vice President of Saarc Chamber of Commerce and Industry and former FPCCI President, Iftikhar Ali Malik has feared that the highest-ever rate of inflation of 21.68 might give a reverse gear to all the measures aimed at wellbeing of masses. Saarc CCI Vice President, in a statement on Tuesday, urged the government to focus on reining in inflation to stabilise the economy.
The highest priority of the government should be to tame inflation and stabilise macro economy, he said, adding that recent unprecedented jump of inflation is increasing the number of poor in the country with every passing day. He said that earlier this month, State Bank of Pakistan further tightened the monetary policy by raising base rate to staunch liquidity. The central bank move has led banks to revise up their lending rates, thus hitting hard the firms in need of cash, he added.
Malik said that removing excess cash from the economy has thrown the business community into deep trouble. He said advised the government to adopt technical measures to moderate the woes faced by the corporate sector, but at the same time bear in mind that curbing inflation should be on the top of its agenda.
He observed that government should avoid lending to the government above the set limit, because excessive borrowing by it is one of the reasons of high inflation. "Industries are taking the brunt of higher discount rate regime in the country". He pointed out that State Bank of Pakistan itself had identified government's excessive borrowing as the primary cause of inflation. "So, it should reduce lending to the government, instead of raising the discount rate" he stressed.
Giving a break-up of rate of inflation in vogue in a number of countries, Saarc Vice President said that in India, in year 2010, the rate of inflation was 9.7 percent, in Bangladesh 5.40 percent, in Sri Lanka 3.40 percent, in Iran 13.50 percent, in China 5.10 percent and even Nepal has an inflation rate of 13.20 per cent.
Saarc CCI vice president opined that SBP preparing monetary policy without studying the nature of inflation in Pakistan that was 'not demand pull inflation', which could be controlled through tight monetary policy. He said that the central bank has failed to control inflation in the country by increasing the discount rate. "Therefore, it should stop its inflation-controlling monetary policy and should devise a growth-inducing policy. If the government does not design growth-inducing policies, the situation will worsen further", he warned.