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Body set up to check rising inflation

25 July, 2007

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ISLAMABAD: Prime Minister Shaukat Aziz has constituted a committee to analyse the reasons for food inflation, and formulate both short-term and long-term anti-inflation policies.

The country's food inflation remained 10.3 percent in 2006-07, against 6.9 percent in 2005-06, which has been serious cause of concern for the policy makers. The committee will be headed by the Prime Minister himself, who is also the Finance Minister. Besides, it will comprise Minister for Industries Jahangir Khan Tareen, Minister for Commerce Humayun Akhtar, Minister for Agriculture Sikandar Khan Bosan, Prime Minister Advisor on Finance Dr Salman Shah, State Bank of Pakistan (SBP) Governor Dr Shamshad Akhtar and Planning Commission Deputy Chairman Dr Akram Sheikh.

The Terms of References (ToRs) of the committee will be finalised by the Prime Minister himself. It would periodically review causes of fluctuation in prices of essential items and take immediate measures to deal with undesirable situation, sources said.

They said that the Economic Coordination Committee (ECC) of the Cabinet, in its meeting on July 19 had expressed serious concerns over the rising prices of wheat and wheat flour. They said that the ECC in its meeting of June 28 had directed SBP to take measures to check wheat hoarding, but no substantial progress has been made.

Sources claimed that authorities had identified a textile mill, owned by an influential politician, whose godown was full with wheat in place of cotton bales, and it was learned that he was earning Rs 4.5 million per day from wheat transactions. According to sources, the government had also received reports that 40 percent of petrol pumps are also stocked with wheat instead of fuel, which means the provincial governments had failed to check illegal movement of wheat.

The SBP has been directed to seek explanation from those traders who took loans for procuring wheat for export purposes but stocked in their godowns to sell in the local market.

The issue of pulse prices was also cause of concern for the government, which was well debated in the ECC meeting, and Minister for Railways Rashid Ahmad had even asked the Prime Minister to arrest only four big fish of Jodia Bazaar and prices of pulses would come down within days.

However, the Prime Minister did not agree with Rashid's idea, but directed that their export should be banned completely. The ECC in its meeting of June 28 had imposed ban on export of gram (chana), gram split and gram powder, but failed to take any consensus decision against export of daal chana. Consequently, profiteers gained time to make procurement for export purposes, which led to increase in its prices.

Minfal, sources said, was of the view that middlemen would continue to fleece the general public until proper market system was adopted. Sources said that the ECC decided to evolve a system for a comprehensive and focused analysis of the situation and directed the provincial governments to do more to control artificial increase in the prices of wheat and flour.

The prices committee, headed by the Prime Minister's Advisor on Finance, which failed in controlling prices of essential items, may be dissolved, sources concluded.

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