Rising inflation spells trouble for Pakistan

from NDTV Profit, India

It's been a long time since we have had a story about Pakistan on here. Here is a report on current economic factors in the country, and how it effects people in poverty. - Kale

Unprecedented inflation in Pakistan has hit common people very hard with petrol having risen by 46 per cent in the last three months, food items by 30-50 per cent and rice by more than 100 per cent. While the government has launched schemes to help the poor, many people have committed suicide in despair.

The inflation rate in Pakistan has increased by 19 per cent since the new coalition government led by the Pakistan Peoples Party (PPP) took over power in March this year - which is a record rise in prices of daily use items. The inflation is due to the high prices of petroleum and gold and deteriorating economic conditions in the country.

According to government statistics, the consumer price index stood at 21.5 per cent this week over the corresponding week last year. The prices of petroleum have skyrocketted as those of food items, but the hike in prices of rice has put it beyond the reach of many.

The price of one kilogram rice in December last year was Rs 55 ($0.80), which now stands at Rs.120 per kg of the same quality.

On the other hand, the stock market saw an unprecedented decline in which more than Rs 370 billion was washed away and the major losers were the small investors.

To control the extraordinary inflation, the State Bank of Pakistan has announced certain measures, including putting restrictions on foreign currency transfer, increase in the interest rate with benchmark KIBOR (Karachi Inter-Bank Operation Rate) being 14.55 per cent for one year. The US dollar-rupee parity stands at 72 while the rupee exchange rate with pound sterling of Britain is 144, which are all time highs.

The federal government has announced the Benazir Income Programme under which cards named after the assassinated chief of PPP will be given to those living below the poverty line to buy food items at special discounted rates. The Rs 340 billion scheme will be implemented throughout the country soon.

Likewise, Punjab province has also announced launching of the Food Stamp Scheme from Aug 14 which would cost the provincial government Rs 20 billion. The scheme will benefit 1.8 to 2 million families living below the poverty line to buy basic food commodities.

However, there's a big question on whether these schemes will be implemented in a transparent manner and whether they will improve the condition of the people, some of whom have been forced to commit suicide because of the hard economic condition.

On Friday, television channels ran a story that a father of five killed himself by taking poison after he couldn't buy food for his hungry children.

According to Hamdard organisation that is working on poverty alleviation, 11 heads of family committed suicide since May 1 while a widowed mother of three killed herself after giving poisoned milk to her three children.

"We feel the situation is very alarming. We need to have a social security system in the country," Rubina Sulman, chief of Hamdard, said.

Link to full article. May expire in future.