Punjab’s Nationalization Act Resonates Across the Country
Published on: June 24, 2024.
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Pakistan’s New Legislation Aims to Curb Inflation and Enhance Buying Power
In recent years, high inflation has burdened many Pakistanis, leaving them searching for answers. Is the cause of inflation due to cost-push factors such as high production costs and the devaluation of the Pakistani Rupee? Or does it stem from inflated prices and unchecked profiteering by processors, middlemen, or farmers?
Addressing this issue, the Punjab Price Control of Essential Commodities Act 2024, passed by the Punjab Assembly on June 10, 2024, is an initiative by the PML-N. It aligns with the party’s manifesto, which promises to curb inflation and improve the populace’s buying power.
The previous legislation relied on outdated laws to set prices for essential commodities in the districts. The introduction of this new Act is commendable, as it aims to modernize and address current challenges.
Broadening the Scope of Essential Commodities
Interestingly, the Act expands the list of essential commodities to include major crops of Pakistan such as wheat, paddy, cotton, corn, and minor crops like edible oilseeds, pulses, fruits, and vegetables. These crops account for over 80% of Punjab’s cropped area.
By controlling the prices of agricultural inputs, including fertilizers, pesticides, and seeds, as well as agricultural and livestock produce, the Act reflects a semi-controlled approach to agricultural production. However, it raises concerns about ignoring market forces of supply and demand.
A Missed Opportunity for Economic Growth
The Act fails to recognize the changes in Pakistan’s political, economic, and global landscape since 1977. Many countries have transitioned to market-oriented economies, allowing market forces to drive economic growth and agriculture development. By designating crops as essential commodities, Pakistan’s new Act goes against the principles of a market-driven economy.
This presents a conflicting situation. While the government aims to promote corporate farming, privatize state-owned enterprises, and attract local and foreign investment in agriculture, it simultaneously seeks to control prices of agricultural and livestock produce. This divergence raises questions about whose profits the provincial government aims to regulate.
The Plight of Farmers and Unfair Practices
Farmers in Pakistan face challenges in dealing with mafias that control the supply of agricultural inputs and manipulate crop prices. Associations in sectors like fertilizers, textiles, poultry feed, edible oil extraction, sugar, and wheat flour milling possess significant influence and political clout, affecting policy decisions and dictating prices.
On the other hand, farmers have no control over market dynamics and the pricing of their produce. They rely on grain markets, fruit, and vegetable markets, where arthis (commodity brokers) charge hefty commissions, eating into farmers’ profits.
Exploring Better Alternatives
To address inflation and promote sustainable agriculture, it is crucial for the Pakistani government to consider better alternatives. Many countries use government subsidies and assistance schemes to keep essential commodities accessible to their citizens, without directly controlling prices. India, for example, enforces price ceilings for essential commodities while also setting minimum support prices for crops to ensure fair prices and stabilize agricultural markets.
The government should recognize that relying solely on regulatory and administrative measures, along with effective monitoring systems, is not enough to achieve lasting reductions in food inflation. It is essential to prioritize long-term growth and boost the agriculture sector for the overall benefit of the economy.
Source: Dawn
