When the people speak

If President Pervez Musharraf and the PML-Q, better known as the King's Party, hoped to use economic performance under their rule to win votes in the upcoming elections, they had better think of something else. For food inflation is hurting ordinary people very hard. The price of wheat flour, a staple of Pakistani diet, has risen from around Rs 260 for a 20-kg bag a few months ago to Rs 340 and above.
Government officials, of course, blame the situation on high international prices, accusing the millers and others of hoarding and smuggling the commodity to all our neighbours: India, Iran, Afghanistan and even the Central Asian Republics. Others lay the blame at the government's door saying it had made incorrect wheat production estimates - a position unwittingly endorsed by official decisions.
It was in January, even before the harvesting season began, when the government announced its decision to lift a two-and-a-half years old ban on wheat exports. Later in May, as the prices started going up, it re-imposed the ban.
Still, there was not enough left to meet the demand. So in September tenders were floated for import of one million tons of wheat to maintain the buffer stocks.
As regards the official version that the high wheat prices in the international market encouraged smuggling and hence the shortages, its critics can easily turn the argument around to allege that because of the high profit margins that low domestic price created in the international market, the export ban was lifted to benefit some exporters at the expense of local consumers.
Or, preventing large-scale smuggling to the neighbouring countries was basically a governmental responsibility, which it failed to fulfil. The least rigorous explanation for the crisis could be what most people are saying, that where the government erred was in making overoptimistic estimates, and that led to reactive policy decisions.
The wheat issue has received so much prominence because the people suddenly find that it has become hard to put such a basic food item as bread on the plate. Food inflation in general has been on the rise even though until the fag end of his tenure in office former Prime Minister Shaukat Aziz had been denying its existence.
He preferred to ignore the fact that ordinary people may not know much about the performance of macro economic indicators, but they were confronted with the rising prices of bread and butter every day. If the government was unwilling to acknowledge the truth and do something about it, they at least knew the truth from experience.
According to a report, food and beverage prices in October this year were 14.7 percent higher than at the same time a year ago. It is also pertinent to recall here that the State Bank had been taking due notice of the issue. It raised its benchmark interest rate by half a percentage point on July 31 while referring to a "worrisome" increase in food prices.
As recently as October 29, SBP Governor Dr Shamshad Akhtar opined "Inflationary pressures remain strong judging from first quarter data, given that food prices have reverted to double digits." Bread and butter issues are known to play a decisive role in the outcome of elections even in the world's richest countries like the US. Closer home, we have the instructive example of the BJP at the time of India's last general election.
The party had entered the electoral fray fully confident that its government's impressive macro economic performance as reflected in its inspirational slogan "India is Shining", will return the party to power again. But that was not to be. The poor farmers in India's much neglected rural areas handed the party a crushing defeat. It would be interesting to see how the economic travails of ordinary Pakistanis play out in the upcoming elections.