Gen Musharraf said yesterday that food prices are to be halved. The govt finally wants to subsidize essential kitchen items so the common man could be relieved of at least some pressure.
The federal budget’s to be released soon. Let’s see what this means…
http://dailytimes.com.pk/default.asp?page=2006\05\17\story_17-5-2006_pg1_1
Re: Food Prices
It is funny how Pakistani intellectuals lap it up when someone says “prices will be halved”.
There is no F’ing way prices can ever come down to more than 10%. There is no margin beyond that limit.
Pakistan (or any other developing country) is suffering from twin diseases of economy: Bad taxation, and 200 years old supply chain system.
Both the tax system and farm-to-wholesale-to-retail need a major overhaul. Until we cleanup this mess, we will be stuck with price gouging, and remain at the mercy of weather patterns.
Re: Food Prices
That's what has to be seen, how the govt would/could plan such a scheme...the budget's coming soon, it'll explain so let's see what's up.
Re: Food Prices
he has said the items wheat, rice, sugar, ghee and pulses would be subsidised, so it can be possible.
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Subsidy cant half prices. No way. Best bet is to subsidize, and reform the system as antiobl said.
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Subsidies are nothing but a shining example of an "Indian giver". You give from one hand and take it back using the other.
Subsidy means, Pak government will use tax payer's money to "lower the prices". However to pay for "lowering the prices", we have to raise taxes on other items. The biggest tax earners are the taxes on "electricity, petrol, and Sui gas". As soon as you increase these taxes, everything will go through the roof.
This is a vicious circle, that we have been going through for a long time. It is time to end this shenanigan and be serious about one thing.
We all need to ask the Pak government to overhaul our laws dealing with taxes, and supply-chain and food distribution network.
*We have to ask before the government gives it to us. *
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I wish they can just tell the truth that prices would remain stable rather than cutting in "half" as it seems impossible in our homeland.
Umer
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Cutting the prices half is not possible in **any homeland let alone Pakistan. **50% drop in prices means some thing really catastrophic with the economy, where the demand-n-supply suffered a huge shock for some reason.
Re: Food Prices
‘Steps to lower prices of kitchen items likely in budget’;
http://dawn.com/2006/05/18/nat3.htm
Re: Food Prices
^^ Pak government has one particular avenue to impact the prices. The concept of "support price" or the government rate at which food grain is bought at the wholesale. Even at that level, 50% in wholesale buying power may not reflect in 50% cut in retail prices. Wholesale prices at the farm do not account for processing cost, fuel costs, and overall supply-chain taxes etc. That means the wholesale buying prices have to be slashed much more than 50% in order to get the retail prices down to 50%.
Who knows the big wig economists in Islamabad may be able to pull the dove out of the magic hat.