Price stability: spanner in the works.

Byline: Jawaid Bokhari

PAKISTANIS distribute Zakat and are generous in helping the less fortunate in the absence of a social security net. However, their religiosity does not stop them from indulging in profiteering during Ramazan.

To ensure adequate supply in the local market, the cabinet has banned the export of all edible items until further orders. Incidentally, exports to the Gulf states surged by 36 per cent during 10 months of this fiscal year mainly owing to a jump in the export of basmati rice (59pc), meat (57pc) and vegetable and fruits (100pc) as compared to a year ago. Quantity-wise, sales have been much higher owing to a big depreciation in the rupee.

Simultaneously, the government has appointed Shaista Bano Gillani as the new Chairman of the Competition Commission of Pakistan (CCP) after removing, with the help of the court, three top CCP officials whom it accused of being in collusion with the cartels. Notwithstanding the collusion charge, the real problem lies in the lengthy and cumbersome process of penalising those who rig the market. In fact, regulatory bodies created to protect consumers have been turned into toothless organisations. The PTI government should enable them to function effectively.

Big retailers are charging 100pc margin on certain basic kitchen items even though it was about 15-20pc a few years ago

A World Bank study shows that between 2003 and 2011, sales worth 1pc of GDP were overcharged due to the presence of cartels in Pakistan. The recent probe into the sugar scam has revealed collusion of sugar mills and wholesalers. The sector's revenues soared without improving productivity. When the international sugar price was quoted at Rs47 per kg, the price at utility stores was at Rs70 and the open domestic market rate was at Rs80-90.

In the current crisis, says a former Karachi Chamber of Commerce and Industry chief Haroon Agar, the big retailers are charging 100pc margins on certain basic kitchen items, up from 15-20pc profits earned some years ago. The wholesale market where middle-sized farmers and arhtis take their produce - perishable items - for auctioning is predetermined in an opaque manner, says a study on Price Stabilisation Mechanism in Pakistan: Food Market Issues and Challenges conducted by State Bank Pakistan (SBP) senior economist Asma Khalid and deputy director Sabahat.

Researchers noted that the quoted wholesale prices do not represent prices at which the actual transactions take place. A...