- Rising food prices, fuel hikes, and inflation erode dignity and survival for working families
Pakistan has a long history of economic crises, further exacerbated by one political crisis after another. The country’s ruling elite have consistently failed to live up to its promises. Pakistan is still dependent on obsolete energy resources, industries, transport infrastructure and educational systems. In addition to these failures, politically motivated economic policies have made good flashy headlines, but failed to provide relief to the common man in the long term.
For example, naan (bread), a fundamental part of meals across Pakistan’s social spectrum, from affluent executives to daily-wage workers, has become significantly more expensive in recent years. In 2019, a single naan cost between Rs8 and Rs10, but over the past three years, prices have surged by 120 percent, now ranging from Rs20 to Rs25 depending on the area. Tandoor (clay oven) owners attribute this steep increase to government policies driving up wheat prices and gas tariffs, leaving them with little choice but to pass the costs onto consumers. This price hike has shifted consumer behavior, with many customers opting for chapati, a more affordable alternative priced at Rs12. Tandoor operators also face mounting challenges, grappling with soaring flour costs, rising gas and electricity bills, and the burden of maintaining employee wages, making it increasingly difficult to sustain their businesses.
In the 1970s, Pakistan’s former prime minister Zulfikar Ali Bhutto galvanized the masses with the powerful slogan Roti, Kapra, Makaan; a clarion call promising the basic necessities of food, clothing, and shelter. This chant resonated deeply, capturing the aspirations of a nation yearning for dignity and survival. Bhutto’s advocacy for these fundamental rights was more than a political campaign; it was a pledge to uplift the marginalized and address systemic inequalities. The slogan became a symbol of hope, uniting people across economic and social divides in pursuit of a better life. Decades later, the urgency of Roti, Kapra, Makaan has only intensified. Rising inflation, unemployment, and housing shortages have made these basic needs increasingly elusive for millions. The struggles of the working class—skyrocketing food prices, inadequate wages, and a lack of affordable housing—mirror the challenges Bhutto addressed. Yet, today, the political landscape feels eerily silent. No leader has emerged to champion this cause with the same fervor, leaving the rallying cry to echo in the hearts of the people without a voice to lead it. While the slogan remains a potent reminder of unfulfilled promises, its revival demands a new generation of leaders willing to confront these persistent challenges head-on.
A 10kg flour bag that was sold for Rs350 to Rs420 in 2019 is currently priced at Rs800 to Rs900. Then there is sugar, which was sold for Rs45 to Rs50 rupees in 2019, but now costs Rs100 to Rs120 in different markets across the country. Milk prices have also risen, with suppliers blaming the government for fuel price hikes and a rise in the cost of feeding their animals. Oil and Ghee prices have seen a massive jump as well. Cooking oil was sold for Rs180 to Rs200 in 2019 and saw a sharp increase by 150pc in the PTI regime in 2020. The current regime has recently increased cooking oil and ghee prices by more than Rs200 rupees in one go, making ghee available at a whopping Rs600 per kg. Even the prices of pulses have seen a Rs30 rise, while Basmati rice, which was sold for Rs70 to Rs80 per kilogram in 2019, now goes for between Rs150 to Rs200.
Besides these essential food Items, there are several other commodities in the average household’s grocery basket. The prices of toiletries and personal care products have seen a hike too with a rise in import duties and the cost of production. The expenditures of a middle-class family on groceries before the pandemic were at least 40pc to 45pc less than where they currently stand. The Beef was sold for Rs450 to Rs500 back then and is now past Rs900 per kg. The price hikes have had an overall impact on the monthly budget. On the other hand, Fuel is one of the major drivers of the economy. An increase in fuel prices has a cyclical effect on the prices of all other goods which require transport, which in turn drives up inflation. Last month, inflation clocked in at 13.76pc; the highest in two years. Same as with prices of petroleum products have seen an exponential rise over the last few years. In 2019, the price of petrol ranged from Rs81 to Rs95 per litre. After the latest price hikes by the government, petrol has seen an over 100pc jump in its retail price and is currently being sold at almost Rs210.
Education is a basic need. However, the better educational institutes are in the hands of the private sector, which are often accused by parents of prowling students and their parents with fee hikes. An average family with three to four children going to schools and colleges takes the major chunk of their family’s income, which is normally 30 to 40% of total monthly income. On the otherhand Private Universities, charge millions of rupees whereas the job market is not very kind to them either. In many cases the fresh graduates paid so low that wouldn’t even cover their monthly transport expenses.
The previous government allocated a Rs 66.25 billion budget to the commission which only catered to 28pc of the its needs. A similar quandary continues when it comes to healthcare. Pakistan spent $39.5 per capita on healthcare in 2019, which is even lesser than the prescribed $44 by the World Health Organization. Moreover, the figure is far less than what our neighboring countries spent on the sector.
Quality healthcare is only available in private hospitals. Moreover, the state of public hospitals and healthcare is going downhill with each passing year, with many tertiary care public hospitals across the country failing to provide adequate services.
Despite all these, new taxes are being imposed totaling Rs 1.8 trillion and are likely to place additional burden on current taxpayers. Efforts to increase the number of tax filers and enforce compliance through varying rates and penalties appear misguided. The federal budget of Rs 18,880 billion, with expenditures nearly matching at Rs 18,877 billion, reveals a government dangerously out of touch with Pakistan’s economic realities. The economic team’s refusal to leverage modern technologies for broadening the tax base and ensuring compliance is a glaring failure. Instead, they rely on archaic measures that will likely fuel tax evasion, undermining the nation’s financial stability. This shortsighted approach burdens an already struggling populace while offering little hope for meaningful reform.
Despite lofty projections of a 3.6% GDP growth rate, the budget’s fiscal deficit remains stubbornly high at 6.9% of GDP, signaling persistent economic fragility. Inflation, already a heavy burden at 11.8%, is set to climb to 12%, further eroding the purchasing power of ordinary Pakistanis. The government’s ambitious 38% tax revenue increase, targeting Rs 12,970 billion (including Rs 7,438 billion from provinces and Rs 3,587 billion in non-tax receipts), appears unrealistic given its flawed strategy. Nearly half the budget—Rs 9,775 billion—is devoured by interest payments, a staggering misallocation that starves critical sectors. Defense spending at Rs 2.1 trillion, pensions at Rs 1 trillion, and subsidies at Rs 1.4 trillion further strain resources, leaving little room for transformative investment.
The Public Sector Development Program (PSDP), boosted by 101% to Rs 1,500 billion, prioritizes ongoing projects (83%) over new initiatives (17%). While allocations for infrastructure (59%), social sectors (20%), and technology (11.2%) sound promising, the impact is diluted by inefficiencies and lack of innovation. The 2024-25 federal budget’s tax policies, dressed up as tools for compliance, are a devastating blow to Pakistan’s fragile economy, threatening to suffocate businesses and extinguish growth. The punishing tax rates imposed on late filers, far from fostering discipline, act as a chokehold on entrepreneurship and investment, particularly for small and medium enterprises already battered by relentless inflation and spiraling costs. These measures don’t streamline revenue—they strangle ambition, driving up operational expenses and paralyzing economic progress. Likewise, the overhauled taxation on immovable properties and capital gains, billed as a revenue booster, heaps unbearable costs on developers and investors, stifling real estate activity and eroding confidence in the capital markets. This reckless strategy undermines the very economic vitality the government claims to champion.
Equally alarming is the budget’s heavy-handed crackdown on tax evasion, with severe penalties and restrictions on non-filers that seem designed to intimidate rather than reform. These oppressive tactics risk backfiring, pushing businesses into a shadowy, unregulated economy to evade the government’s suffocating grip. Such a shift would shred the tax base and plunge Pakistan deeper into fiscal chaos. The government’s myopic focus on short-term revenue, devoid of incentives or pragmatic balance, betrays a profound disconnect from the realities faced by businesses and citizens. This approach doesn’t just hinder growth—it sets the stage for long-term economic despair, leaving Pakistan’s future hanging by a thread.
Compounding these issues, the proposed amendments to the Sales Tax Act for 2024-25 are a muddled attempt at reform. Scrapping exemptions and zero ratings while imposing standard rates on mobile phones may aim for tax uniformity, but exempting phones valued over US$500 creates a convoluted, tiered system ripe for administrative chaos and market distortion. This half-baked policy could skew consumer behavior, disrupt supply chains, and undermine fair competition. Without rigorous monitoring of market trends and consumer responses, these measures are a gamble that Pakistan’s fragile economy cannot afford. The proposed budgetary measures under the Federal Excise Act 2005 for the fiscal year 2024-25 also include imposition of Federal Excise Duty (FED) on specific items. While introduction of FED on acetate tow and nicotine pouches, alongside the enhancement of FED on e-liquids, indicates a move towards taxing certain consumable products, concerns may arise regarding the potential impact on consumer affordability and the overall cost of living.
Moreover, increase in FED rates on essential commodities like sugar and cement could potentially contribute to inflationary pressures, affecting businesses and households. Additionally, the proposal to impose FED on commercial properties and the first sale of residential properties may have implications for the real estate sector, possibly dampening investment sentiments. The authority to seal business premises selling illicit cigarettes signals efforts to combat illegal activities, but the efficacy of such measures in curbing illicit trade remains to be seen. Overall, while revenue enhancement is a critical aspect of fiscal policy, policymakers must carefully balance taxation measures to mitigate adverse effects on economic growth and consumer welfare.
The federal budget’s tax reforms for 2024-25, while cloaked in the guise of promoting compliance, risk strangling economic growth and driving businesses into the shadows. Steeply punitive tax rates for late filers, intended to enforce discipline, are a blunt instrument that could choke investment and stifle entrepreneurial activity. By raising the cost of doing business, these measures threaten to stall economic expansion, particularly for small and medium enterprises already grappling with inflation and rising operational costs. Similarly, the restructured taxation on immovable properties and securities capital gains, meant to streamline revenue, imposes a crushing burden on property developers and investors. This ill-conceived approach will likely inflate business costs, deter real estate development, and scare off capital market participation, undermining the very growth the government claims to prioritize.
Pakistan’s economy teeters on the brink, desperately crying out for sweeping reforms and bold, decisive action to avert collapse. Yet, the government’s inertia leaves the nation trapped in a suffocating crisis, with no respite in sight. For the common man, hope is a distant memory, crushed under the relentless weight of survival. Families face an unforgiving grind: skyrocketing rents, soaring tuition fees, crippling transport costs, ever-climbing grocery bills, and the constant dread of unpredictable medical expenses. Each day is a battle to make ends meet, with the specter of financial ruin looming larger than ever. The dream of stability has been replaced by a pervasive sense of hopelessness, as ordinary Pakistanis are left to fend for themselves in an economy that offers no mercy and no way out.
The author, Nazir Ahmed Shaikh, is a freelance writer, columnist, blogger, and motivational speaker. He writes articles on diversified topics. He can be reached at nazir_shaikh86@hotmail.com