The government has decided to deregulate wheat business to encourage private sector to import the commodity from any country, except India. The Adviser to Prime Minister on Finance, Dr Salman Shah, on Monday said this while talking with newsmen after launching 'Pakistan Poverty Reduction Strategy Paper' (PRSP) here. According to him, the government would withdraw 6 percent withholding tax on wheat import to make the business attractive to the private sector.
However, import of wheat from India would not be allowed. He said that New Delhi would remain excluded from the list of countries for wheat import as it lacks required quarantine facilities.
He also hinted at revision of wheat issue policy for the flourmills for 2005-06. He said the government would ensure that wheat release prices covered handling and storage charges.
The adviser did not agree with suggestion to apply curbs to discourage illegal wheat transportation to Afghanistan. His argument was that Afghanistan is a potential market for Pakistani exporters for wheat business and harsh steps may deprive them of Kabul market.
He said the Utility Stores Corporation (USC) would supply quality flour (atta) to consumers at Rs 11.50 per kg so that they do not suffer from recent price hike. He noted that Passco would ensure sufficient stocks to the USC for selling at concessional rate.
Dr Salman said that the government was negotiating with New Delhi for a mechanism for early import of livestock from India. He claimed that duty-free import of essential items has depicted upward trend. He said he expected reduction in the prices of edibles from next month.
The adviser conceded that inflation rate of 9.3 percent was a serious problem and a major cause of high prices of edibles in the open market. However, he was optimistic that a multidimensional strategy, now being evolved, would bring the prices down considerably in the next one to two years. He said the government was fully aware of the gravity of the situation and was taking all possible steps to bring inflation down to some satisfactory level.
He mentioned various steps, which were being taken to control inflation. These were tightening of the fiscal policy, quick response to the shortage of edibles to fill the demand/supply gap and effective monitoring system to check prices in the local market so that middleman does not exploit the market.
Salman termed the PRSP as a living document and hoped that it would help the government eradicate poverty. He claimed that PRSP Communication Strategy focused the poor and vulnerable so that the standard of life could be improved.
Salman dispelled the impression that budget 2005-06 was pro-rich and claimed that for the first time the PSDP size was over Rs 300 billion and it would cover all the people-centric development programmes.
He did not rule out the possibility of increase in gas and electricity rates. However, he said that Ogra and Nepra were the right fora to decide any increase in gas and electricity rates.
DFID chief for Pakistan Yousaf Samiullah said Pakistan's strategy for poverty reduction was moving in the right direction and DFID would continue its support to achieve the objectives. He said that DFID would provide Pakistan $500 million grant in the next three years to move forward its strategy for eradication of poverty.
Additional Secretary, Ministry of Finance, Asif Bajwa, stressed the need for better communication between different stakeholders of PRSP so that they could have better harmony on the implementation of the strategy. He added that the government would update PRSP some time in July/August and this would be followed by a revised version in June 2006.