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Inflation begets poverty

Mr Imran Khan, the premier of Pakistan, says that if poverty rises, we will not win war against pandemic. He is right and it is a cause of massive concern at the moment. The prime objective of the Government of Pakistan in the given circumstances must be to eliminate poverty and curb inflation. For this a fulcrum strategy is to be chalked out forthwith. The government has made a couple of attempts to ensure price stability and to stave off the long-standing issue of hoarding, which is generally perceived the primary cause of price hike and soaring poverty levels in Pakistan. Actions speak louder than words. Rhetoric does not play any part in the solution of the snags rather brings about social malaise as the time elapses. There is no denying the fact that inflation spikes miseries of the poverty stricken masses and this is the foremost reason for the unrest anywhere in the world.

With the advent of the pandemic in Pakistan in the last week of February this year, there were enormous concerns about the crumbling health facilities. Pakistan with over 25,000 confirmed cases and over 600 deaths is one of the most affected developing countries. The world must come forward to help the sagging economy of Pakistan in these trying times. It was being anticipated that spike in the number of patients could bring unprecedented situation in Pakistan as has been inflicted on Italy, Spain, Iran, Germany, France, the USA and the UK. Well, it is essential to know that it is not only the health facilities but also the inflation coupled with unemployment, which have played havoc in Pakistan for quite some time and have gone unheeded in general. The ever-diminishing buying power frets not only the impoverished and the middle class but also the affluent segment of the society.

It is a stunning idea to address poverty, however, it is more imperative to address the cause. Prices of utilities have seen multiple hikes in the recent times which are well known to all and sundry. This has been one of the reasons of the soaring poverty. The incumbent government must analyze the relationship between poverty and inflation. There is one economic argument that inflation does not hit the poorest of the nation but the middle class. This does hold true to some extent, however, along with the middle class, the impoverished segment of the society cannot escape from the brunt of the hike in prices of the staple foods, medicines and essential items. Inflation does devastate the middle class by diminishing their savings and decelerating the value of their wealth, however, the poor segment loses nothing but the meals twice a day.

 

In the wake of numerous steps taken by the government over the period of preceding two years to stabilize the economy, some negative impact has been quite detrimental on the poor segment of the society. Millions have lost their livelihood in pursuit of containing the pandemic effects. The business community does not seem to have financial muscles to pay to their employees by virtue of the closure of economic activities across the country.

The government must analyze the effects of selected macroeconomic variables on poverty and come up with splendid fiscal planning in these trying times. There are some individuals who argue that there is always increase in wages of the individuals, which might assuage the impact of inflation. People do get raise in wages every year to mitigate the impact of price hike, however, it must be understood that inflation has some effect on income poverty and more impact on the consumption poverty. With the spike in prices, the burgeoning demand comes to a standstill and diminishes later on. Offering raise is a near-sighted approach whereas containing hoarding and price hike is a far-sighted approach for the long-time sustainability. Price hike is the foremost detriment and begets the unavailability and lack of clean water, nutrition, clothing, healthcare, education and shelter. Prices of staple foods have witnessed hike at the time when people feel insecure and want to make sure that nothing is squandered. Laborers have been idle for over a month and must have incurred debts. This is worrisome. Though no government alone in the entire world can cope with such situation, which is out of the blue, however, prudent measures are always handy.

The core job of Pakistan’s economic team at this particular time should only be to ensure employment opportunities which would eventually mitigate the other impacts to be tackled. The suggestion to provide interest-free loans and relaxation in electricity bills to small business entrepreneurs is spectacular notion which must be enforced forthwith. This seems to be the only remedy, to be precise, at the moment to emerge from the conundrums of the unprecedented magnitude. Moreover, stringent measures for the price stability would result in solace for the downtrodden and the impoverished today and during the forthcoming months.

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