The anti-food inflation package

The federal cabinet under the chairmanship of Prime Minister Imran Khan approved a 10 billion rupee subsidy package for the remaining five months of the current fiscal year to the Utility Stores Corporation (USC) - to be disbursed at the rate of 2 billion rupees per month. The five items that would be subsidised and their availability ensured are wheat, wheat flour, rice, sugar and pulses. This was revealed by Firdous Ashiq Awan, Special Assistant to the Prime Minister on Information and Broadcasting, while briefing the media on cabinet's decisions. There is no doubt that this is a well-intentioned plan, reflecting Prime Minister Khan's acknowledgement that food inflation has reached levels that are compromising the capacity of large parts of the population to feed themselves and their families, yet unfortunately it lacks clarity on several counts and one would hope that this is provided by the government at the earliest.

An objective, as stated by Awan, is to ensure availability of these five items is critical as previous commodity specific subsidies were utilised by bulk purchasers, an example being the sale of sugar to bakeries/hotels, through connivance of the USC staff, leaving USC stores' shelves empty of the product for the general consumers. Awan did not mention if there was a limit to the amount of these items that could be purchased by one customer and whether there was a mechanism to ensure that a customer did not go to several USC outlets and exceed the allowed quota, if any. There is also no clarity as to whether this subsidy is to be limited to the Benazir Income Support Programme (renamed Kafaalat) beneficiaries or would be available to all.

According to the latest poverty estimates noted by the Asian Development Bank in a 2019 report, 24 percent of Pakistan's population lives below the poverty level - 31 percent in rural and 13 percent in urban areas with 38.8 percent of the population nationally as poor based on the multidimensional poverty index. With Pakistan's population of 219 million people today 24 percent constitutes nearly 52.5 million people while as per Awan there are 4.3 million Benazir Income Support Programme (renamed Kafaalat) beneficiaries which, she declared, would rise to 70 million though how soon was not mentioned. In other words, there is a need for the government to define who would benefit from the subsidies and how would the government ensure that all the poor and vulnerable, including those who are not existing BISP beneficiaries, would be able to benefit from the subsidy to the exclusion of those that the government deems are able to procure items at inflated market rate that, disturbingly, even the government ministers acknowledge are largely due to supply side issues emanating from poor governance.

There are a limited number of USC stores in the country, under 6,000 of which about 4,000 are operating, which are grossly inadequate to deal with 52 million customers and the situation is worse in rural areas that as per the Pakistan Bureau of Statistics is facing higher food inflation relative to urban areas no doubt partly because access to USCs is severely limited. The government had earlier mentioned that it would use 50,000 retail outlets to disseminate these five items at subsidised rates. There is, therefore, a need for greater clarity though Awan did mention that the government had decided to use the prevailing system given that it is available and its impact would be immediately felt by the consumers.

There is, therefore, a need for greater clarity and one would have hoped that Awan had been flanked by the relevant ministers, perhaps even the BISP chairperson, when she addressed the media. The government must also ensure that the eligible beneficiaries are aware that they are eligible and able to take advantage of the subsidy.