EDITORIAL: The government’s clear lack of planning regarding measures of national importance that directly impact millions of people was laid bare on July 9 as it decided to step back from the 51 percent increase in electricity rates it had approved only last week for the protected category of domestic power consumers, who use up to 200 units of electricity per month.
The prime minister, while announcing a three-month, Rs50 billion package that would provide relief of Rs7 per unit to around 25 million consumers, essentially acknowledged the huge burden that low-income groups are expected to carry to extricate the economy from a crisis that was not of their making.
It is evident that the threat of political backlash from the poorest sections ultimately overrode the need to follow the dictates of the IMF programme, something that has also become vital for our economic survival.
While there is no denying the combined impact that crushing inflation, galloping utility bills and paltry incomes have had on a hapless public, the government’s backflip on raising electricity tariffs, calls into question the competence and foresight of our economic managers.
Did they not foresee the extreme public reaction this increase in tariffs was bound to have; and were they blind to the crisis large sections of the population are currently undergoing before approving such an increase?
One also wonders what the government plans to do after the end of this three-month relief period when protected consumers will again be expected to pay bills on the higher rate. Does it expect this segment to have miraculously turned around its economic fortunes come October when the higher rates will be in force?
While the prime minister has assured that the IMF has been kept in loop regarding the decrease in electricity tariffs so as not to derail the loan programme, what is concerning is that the Rs50 billion earmarked for this package have been appropriated from the Public Sector Development Programme (PSDP).
Slashing the PSDP a mere 10 days into the new fiscal year does not bode well for the government’s development agenda.
As has been highlighted in this space before, the previous fiscal year had also seen the PSDP being cut by a significant 25 percent against its original allocation, and the authorities clearly remain bent upon carrying on the tradition of ripping through funds meant for development projects of national importance in order to meet other requirements.
Instead of reducing irresponsible government spending, slashing discretionary funds handed out to parliamentarians, and taxing untaxed and under-taxed segments of the economy, it is the low-income groups and the PSDP that have repeatedly borne the brunt of poor economic planning and subsidised the extravagant ways of the ruling class.
The overwhelming economic burden on the poorest appears all the more galling when we look at the under-taxed agriculture sector, which contributes around 24 percent of the GDP, according to official statistics, but generates nowhere close to the ideal amount it should be contributing to the exchequer.
The president’s recent acknowledgement regarding the need to target at least farmers with large-scale landholdings to increase revenue collection from this segment, therefore, takes on special significance.
Even though he appeared less-than-enthusiastic at this prospect, admitting the necessity of appropriately taxing agriculture in order to comply with IMF stipulations is nevertheless welcome.
However, the fact that it is the dictates of the IMF and not our own dire economic state that has prompted this realisation speaks of the rulers’ utter disregard for what needs to be done to secure the country’s economic future.
It is this attitude that has repeatedly forced us to knock on the IMF’s door, and unless the ruling elite realise that comprehensive, equitable reforms have become inevitable, we will remain trapped in a cycle of dependency, economic instability and short-term populist measures.
Copyright Business Recorder, 2024
Comments
Comments are closed.