- The latest power tariff hike merely adds to the common man’s burden
The National Electric Power Regulatory Authority (NEPRA) has notified a quarterly tariff adjustment of Rs 1.62 per unit, which will come in addition to the recent increase in the prices of medicines that will occur after the government amended the drug pricing policy of 2018. The power tariff hike is in fulfillment of the agreement with the IMF, whereby the tariff increases, to end circular debt, are an essential condition for maintaining the programme. While other creditors have relaxed their schedules for the covid-19 pandemic, it seems the IMF is getting back to business.
The drug price hike of seven percent increases for lifesaving drugs and 10 percent for others, is supposed to be because of inflation. The two tiers indicate that inflation cannot be the sole consideration. It also indicates that the government does have a role in the price levels of a wide range of items. It would do well to remember that it had promised during its campaigning to bring down price levels. It has not done so. It might argue that its formula, recovering looted wealth, has not worked, but whose fault is that? The end result is still higher prices, which people struggle to pay.
Then there is the conundrum of why there is inflation during a depression. This is only possible because of some fault in the purchasing power of money. Is the reason in the debasement of the currency brought on by the IMF conditions, which included a massive devaluation? This is the government that campaigned on a promise not to go to the IMF. It did. And the people now are paying the price, literally. The government is not exercising its considerable powers to regulate prices. This will cost it dearly at the ballot box, because it has been shown by overwhelming empirical evidence that people vote with their pocketbooks, and their single most important pocketbook issue is inflation.