EDITORIAL: Finance Minister Shaukat Tarin's recent revelation that the government would intervene in the market to control food inflation was no doubt meant to calm angry voters in time for the next election. Yet in fact it was a tacit admission of the government's own failure to control prices through conventional fiscal and monetary tools. And guess who was left with some egg on his face when just the next day headlines spoke of the most expensive sugar import in the country's history? Intervention for price control is just a fancy way of saying that the government was ready to cough up food subsidies for hundreds of millions of people just to keep the political temperature under control. But that's hardly the most desirable route for a country experimenting with an expansionary budget, that too in the face of IMF's contractionary 'structural adjustment' mantra. Food inflation has confronted the PTI government right since the start and its explanation for it has changed more often than the change of guard at the finance ministry. First, when Asad Umar was at the helm, it was the fault of the previous PML-N administration; but then so was just about everything under the sky that wasn't working quite right. Thereafter, when the ministry was entrusted to the cold precision of Dr Hafeez Sheikh - privatisation minister under Gen Musharraf, finance minister under PM Gilani, - it was revealed that special interest groups that operated like 'mafias' were actually responsible for what was a very artificial price hike in food items with very inelastic demand; and, of course, that the government would soon sort them out and prices would duly fall back in line.
Fast forward another two years and the arrival of Shaukat Tarin - also finance minister in the PPP administration - shifted the responsibility to the supply chain difficulties that had been unleashed along with the global recovery after the short-though-steep recession caused by the pandemic. But ordinary people are unlikely to buy this argument because they've been paying extra for their food a lot longer than Tarin has been trying to justify it. And even if exogenous shocks beyond the control of the government are to blame for the latest spike in food prices, this must only make a bad situation worse because there was nothing to suggest, least of all prices themselves, that any of the government's moves over the last three years brought any sort of sanity to prices.
Copyright Business Recorder, 2021