Dr Kaiser Bengali, a renowned economist, has termed the increase in electricity rates a death blow for the manufacturing sector with serious implications for exports and employment. Talking to Business Recorder, he said that there were expectations from new government of a more professional approach towards economic management but the measures taken so far have been deeply disappointing.
He said that first major disappointment was the federal budget for the year 20013-14, which raised the GST rate on goods by one percent. The manufacturing sector is already suffering from high cost of production and has over the years, been placed in a disadvantageous position relatively to other sectors. The GST rate increase has burdened the manufacturing sector further and the power cost rise will force many units to shut down, he added.
Admittedly, it is not feasible for the government to continue to supply electricity at less than the cost of generation. However, the per consumer cost of electricity generation is high for paying consumer because of non-payment of electricity bills by institutions and individual consumers. The government has imposed the cost of non-payers on the payers, instead of improving the governance machinery to reduce, if not eliminate, free use of electricity.
Even if there is a genuine need to raise electricity tariff, the increase needs to be part of an overall economic package that promotes industrial growth, which is the engine for exports and employment. That economic plan or vision appears to be completely lacking. Former member NFC demanded that if power tariffs have to be raised, the industrial sector should be provided compensatory relief on the tax front and proposed GST rate for goods be reduced to 15 percent for the current year and progressively to 5 percent over the next 5 years.
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