Though rising prices is not a new phenomenon, yet the common
man tends to compare the current prices with those prevailing during the
past few years. Prices have substantially increased since 1995, and have
shown an upward trend, especially after the Budget and hikes in
on regular
administered prices. It is now very difficult for people depend
monthly income to make both ends meet. We all feel that something
should be done to check the prices.
There is a lot of anger, resentment and discontentment over the
rising prices, and most people seem to think that the government has been
totally ineffective in checking the prices. However, the controlling price
rise is not an easy task, it require special product, by product and
industry, by industry analysis. The price issue involves everybody at
resent. Though the government claims to be doing whatever
situation is now under check. The middle class is the worst affected by the
price hike. The industry and the trade are responsible to a good extent for
not playing fair with the public. The government, businessmen and the
public should collectively tackle the problem, back in theory and practice,
can, the
New price lists put up by pharmaceutical firms show an average
increase of over 32 percent, including a five percent GST, in the prices of
five controlled medicines. The hike comes in the wake of reports last
month that drug companies may be allowed a raise of 12 percent in the
prices of decontrolled medicines and six percent for controlled or essential
category of drugs. The latest increase, which came into effect from
September 96, is said to have been with the approval of the health ministry
allowing the pharmaceutical can arms another round of price adjustments
both controlled and decontrolled categories
disproportionately high. This is probably the third increase in the last eight
that seems
months which has made drug prices in Pakistan among the highest in the
region. Admittedly, budgetary measures which include, besides the GST,
additional import duty of five per cent on pharmaceutical raw material and
10 percent customs duty and five percent sales tax an import of finished
products, provided a plausible ground for the manufactures and trades to wound pressure for an upward revision offices. The slide in the value of
materials and finished products are imported. It is, however, the arbitrary
the rupee vis-à-vis the US dollar also affects prices because most raw
and disproportionate increase that are usually made on the plea of cost
inflation which remain the bane of the pharmaceutical sector. And over
and our again the government has proved virtually helpless in face of
unauthorised and at times excessive increases which have placed a heavy
burden on the average consumer. The authorities have been failed to
effectively check artificial scarcities aimed at pushing up prices. As in the
past, the latest hike has also been accompanied by similar unethical
practices.
The need is imperative to protect the people’s interests against
frequent price hikes as a corollary to the policy of partial deregulation of
drug prices introduced in 1993. There have been reports suggesting that
drug manufactures have been trying to get many essential drugs off the
price regulations list. Even otherwise there has been a reported increase of
80 points in the drug price index over the last three years as compared to
the consumer price index which has registered a rise of 36 points during
the same period. Recent studies have also revealed that multinational
companies have been reaping more profits by selling fever medicines than
before at higher prices of particular concern is the disclosure that prices of
life saving medicines have registered a 112 percent since 1993. Evidently,
in such an environment, leaving essential medicines to market forces alone
to determine prices would be fraught with grave risks to public health in a
country with inadequate health services and limited purchasing power of
the people. At the heart of the problem is the flamed policy of allowing
multinationals to buy raw materials from their principals in other
countries, at a high premium and sell the finished products locally at
inflated rates. It is also said that multinational pharmaceutical companies
operating in both India and Pakistan are selling their products at prices up
to eight times, cheaper in neighbouring India as compared to Pakistan.
There are complex issues and yet it should be possible to devise a price
control mechanism whereby such wide discrepancies can be avoided and
prices can be maintained at a reasonable level. Steps must also be taken to
keep cost-inflating factors relevant to pharmaceutical production under
proper check and scrutiny.
Sugar is at present selling at over Rs. 20 per Kg and the farmer
compares the prices of crop with the prevailing sugar price and expects a corresponding reward for his investment and labour. Finding no way out
of the stalemate. Punjab’s 38 sugar mills are said to be vying each other,
expectation of
although in a limited way, to lift the cane from the field at Rs 32 – 37 per
40 Kg. Still resistance of the farmers continues, an on
getting a price equal to last years. Most industries based on indigenous
raw material, like textile and sugar, have become used to making profits
through efficiency of their operations but through depressed prices of raw
material. Expansion of these industries took place in recent years on an
expectation that the situation would last indefinitely and the investment
was mostly in the form of bank loans with sponsor’s risk being minimal,
Now that price control, are no more there and the economy has been
largely deregulated, a new equilibrium in prices and between the
producers of raw materials and the manufactures will have to work itself
out. The government’s support price system has no relevance in the
present context. It has totally broken down in case of cotton and sugar.
cane and hardly works in other cases. In fact, it causes conflict, hinders
free play of market forces, and finally gives away to these after much
waste of time and efforts. The reason why this happens is that support
prices are fixed without any exercise in cost calculation and taking demand
situation into consideration. The government has absolutely no system of
cost assessment. In view of the fact that agricultural production is proved
to violent fluctuations caused by natural as well as human factors, a
regulatory price mechanism for the agricultural sector is desirable. But
this mechanism needs to be realistically devised. The government must not
remain unconcerned with the present dispute between the farmers and the
crushes. Each day’s delay is casting scarce foreign exchange as sugar is
being imported while the crop is mature and a sizable part of the crushing
capacity remains idle. The interests of the growers and the crushers must
the reconciled and the greed and rapacity of both restrained.
While Pakistan continues to import sugar in a situation of acute
balance of payments crisis, former have a mature crop, supposedly
bumper one, and the mills are crushing cane at about 10 percent of their
capacity. The crushing season starts from October and much time
available to settle the dispute between the farmers and the crushers.
Despite the fact that the prospects of the crop and good, the crisis is
deepening, the reason being the disagreement between the growers and the
crushers on the issues of the price of the cane. The government has fixed
the support price at Rs. 24 per 40 Kg. The growers say it does not meet their cost of production. Last year finally to relent and pay up to Rs. 40-
production short fall of about 400,000 tons of sugar. It is a repeat situation
45 per 40 Kgs but the consequence of the delay was that there was a
that the growers are now demanding last year’s price.
.
Financial position of the cane growers has generally improved in
recent years, their holding capacity in a situation of disputes with the
traders and crushes has also increased. In certain districts of Punjab
farmers have got organized, which has given then added bargaining
strength. The Punjab Kissan Board is helping growers take on sugar mills
an organised manner. They are not under pressure to sell at a price
which they think is not remunerative enough. A profitable alternative in
the form of gur-making is also available, and Afghanistan and the NWFP
constitute a large and ready market for the product.
Gas prices have been increased thrice in six weeks. Government is
likely to approve 15-25 percent raise in the prices of natural gas for
domestic, commercial and industrial consumption. Such an increase will
immediately raise the cost of electricity generation and fertilizer
production. The prices of the two sources of energy – gas and electricity
will automatically affect the whole range of economic activity and
inflationary trend will get a bin boost, making the life of the common
people more miserable. The government says that the price increase was
being effected on the demand of IMF. In the government aware that gas
price increase will have an immediate impact directly and through higher
prices electricity on the cost of production of almost all agricultural and
industrial products and services?
What baffles one is IMF’s as well as government insistence on
bringing the price of Pakistani gas at per with international prices. Neither
land, nor royalty, nor labour, which are impartment components of cast,
is internationally priced here. Precisely for this reason, in countries where
gas and petroleum are produced, a price differential is maintained between
domestic and export prices. One factor that government has mentioned as
causing losses to the gas companies is excess recruitment. This
overstuffing was said to have been due to the considerations of keeping the
tribal sardars, in whose areas gas deposits were located, pacified. If the
information is correct, this practice must be discontinued forthwith. It is
for the first time that the people are being told that the gas companies are
running in losses. Until recently these were being considered as blue chip
companies and gold mines for purpose of privatisation. If the contemplated price increased is required for mobilisation c
additional funds for prospecting and exploration and for the development
of discovered gas fields, the government should say so and let the
know about the resources collected specifically for this purpose. If this is
not done, the obvious presumption will be that the increase is being
effected to bring the budget deficit down to the IMF prescribed target of 4
percent of GDP.