Targeted relief
As a damage control exercise to ward off the recent price hike, the government has come up with a relief package. It says it will take a bite of Rs28 billion as subsidies would be rolled out to the downtrodden. It is an earnest attempt to woo the poor strata, but not sure how the mechanism will work. As formatted, people with less than Rs40,000 income will receive an added Rs2,000 per month as dearness allowance, and all those duly registered under the BISP are eligible by default. New applicants are free to apply provided they fall below the line of stated income. Women have especially been encouraged so that the ripples of inflation are addressed earnestly.
This tailor-made package comes as a succor to 14 million households. Besides 3.3 million BISP beneficiaries, it will cover 6.7 million households with poverty scores below 37. The finance minister, in a hurriedly called press talk, also hinted at discounted petrol and diesel for a targeted audience, but it remains unclear who, how and under what criteria that would be executed countrywide. Nor was it stated what would be the price of petroleum products for the destitute plying motorcycles and rickshaws. Presently, petrol price is Rs179.86 and kerosene oil Rs155.56 per litre, and it is also feared that a new jack-up is round the corner. This details a very horrifying picture as its snowball impact will be felt on commodities across the board.
While the government is in talks with the IMF to re-negotiate a new deal, hoping for an immediate tranche of $1 billion, and an added extension of $2 billion over the next 12 months, it is set to come at a crippling cost. The lender now wants to tax the salaried class, and reports say a 30 per cent deduction at source is projected. This will bring in more pressure on the government, and the annual feature of salary raise will end up as a non-starter. Moreover, dipping reserves at the hands of a depreciating currency will hardly leave any cash in hand to allocate for the development sector. The less said the better about debt-servicing as a bleeding rupee has surmounted it to new heights. Piecemeal gestures are not a solution in the long run. This is where an out-of-the-box outcome is desired.
Published in The Express Tribune, May 29th, 2022.
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