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How to ensure stability of prices in Ramadan ?

April 29, 2015

By: ASAD RIZVI (KARACHI)   Published on April 29, 2015

On April 28 in Business Recorder, I came across a news report that Ministry of Industries and Production has sought funds for Ramazan package. The proposal has been presented to Economic Co-ordination Committee (ECC) of the Cabinet. This is a very common and futile exercise, as it has always failed to achieve the desired results. Ramazan subsidies have never served the purpose.

Past experience suggests that measures through Utility Stores may have provided relief to a tiny part of the population, but these have never succeeded in stopping retailers from making extra profit that causes suffering to a large section of the population.

There are two major factors that cause price hike before the advent of Ramazan. It is either because of a growing gap between supply and demand or intentional hoarding. It is caused due to inefficiency or mismanagement of price control authority.

Take the example of the Middle East where the UAE has taken measures two months earlier to ensure that food prices do not rise during Ramazan. This year they have agreed to freeze prices of 1600 selected commodities. Violators are warned that they will be severely punished with fines ranging between UAE DHS 100,000 and 200,000. Similar measures have been taken by Saudi Arabia, Qatar and other Middle Eastern countries.

In Pakistan, minor price fluctuation is understandable if there is a supply delay or genuine shortage of stock. But hoarders should be punished for taking unnecessary price advantage. Price control in Ramazan does not require rocket science. Better management through pro-active measures can completely change the scenario in stabilising prices.

It is a known fact that prices of branded items consumed by the upper middle or upper class of a society are normally fixed and do not surge unnecessarily. But a large part of population that consists of lower or lower-middle class faces extreme hardships due to excess usage of unbranded commodities in Ramazan.

Prices of fruits and vegetables, ghee, flour, sugar, pulses and tea are commonly in huge demand. Hoarders and violators will not cease their wrongdoings. Based on monthly average sale, the government should also ask manufacturers and retailers to reduce prices by 10-20 percent of which 50 percent should be shared by both. Meanwhile, ECC should ensure that the government is able to identify the loopholes/shortages and withdraw or reduce duty on all such commodities 15 days earlier for a certain period of time and encourage import of vegetables and commodities to meet the shortfall that will discourage profiteers and hoarders.

In the holy month of Ramazan if the benefit is passed on to the large part of the population, it will do no harm to manufacturers, wholesalers and retailers. Instead they will serve the Muslim ummah for a good cause. Therefore, this is an opportune time for the federal and respective provincial governments to seek support from the business community that will make them more creditable.

Copyright Business Recorder, 2015

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