Dear govt, wake up and smell the inflation!

Last week, tomatoes were being sold for Rs60 per kg, but this week they are priced at Rs80 for the same amount...

Just last week, tomatoes were being sold for Rs60 per kg, but this week they were priced at Rs80 for the same amount. When I asked why the sudden price rise of Rs20 in just one week, I got a short reply:

“Baji, saardiyan shuru hogayi hai,” (Sister, winter has commenced.)

Now, what do tomato prices have to do with the sudden drop in temperatures?

The supply of tomatoes is going to continue just as always- there is no sowing strike, no harvesting strike, no farmer strike, no buyer strike, no transport strike - and there hasn’t been any news of devastation to crops either. The simple answer is that it’s just profiteering tactics.

And unless the government brings about a drastic revolution, this menace of hoarding and profiteering is unlikely to stop any time soon.

The concern remains, not only for the consumers who are increasingly finding it difficult  to make ends meet, but also for the economy. As inflation rises, our poverty level increases, and consequently the entire system of the economy gets impacted - not to forget the gross domestic product is continuously feeling the strain.

The Federal Bureau of Statistics reported recently that the consumer price index, the main indicator of inflation, inclined by 15.5 per cent in November. This figure was 15.4 per cent in October.

It makes one wonder why the State Bank of Pakistan is adamant on increasing interest rates when it is not working on curbing inflation. When the interest rates were 12.5 per cent, inflation was hovering over 12-13 per cent. Six months down the line, the discount rate is 14 per cent while inflation has hit 15.5 per cent.

Businessmen, economic experts are all skeptical of government’s tightening of the monetary policy. But of course, our government has a mind of its own.

Just today, the Federal Board of Revenue (FBR) announced that the Reformed General Sales Tax (RGST), if approved by the parliament, would not result into hiking inflationary pressures. However, the prices of those items could go up on which there is an exemption, a comparative analysis done by the FBR said.

According to analysis, that the RGST system would replace the existing regimes of sales tax and excise on services. The RGST would eliminate multiple tax rates from 17-26 per cent to a single rate of 15 per cent.

A uniform enhanced annual exemption threshold of Rs7.5 million (which is presently Rs5 million) shall be applied to keep small businesses including small traders/retailers/cottage industry out of mandatory tax compliance. The whole supply chain, including distributors and wholesalers would be brought into the tax net for documentation purposes.

That's not too bad, eh?

After all, small traders will only see a rise of a "measly" Rs2.5 million. (Don't we all keep that much money locked in our closets?) The government's decision has invited skepticism from businessmen, economic experts, the rich and poor, the literate and illiterate, the uncles and aunties - but of course, our government has a mind of its own.