ISLAMABAD, 9 July — Despite the official claims to contain inflation, it looks like fiscal 2002 will see prices of a range of industrial goods and service rising in the next few months.
Inflation rose from 3.7 percent in 2000 to 4.7 percent in 2001. With prices of a large number of goods, services and utilities rising rapidly and repeatedly, will it not be quite a job for the government to keep inflation down to a single digit? The new fiscal 2002 started July 1 with yet another rise in oil prices. An increase in gas tariff is on the anvil, and the electricity utility Water and Power Development Authority (WAPDA) is gunning for a 10 percent hike, otherwise it fears to go bust. Another bad news for the consumers is that the prices of medicines are going to be raised still more by 10 percent.
Lets look at medicines first. The Economic Committee of the Cabinet (ECC) has agreed to let the pharmaceutical companies raise prices of their medicines by 6 to 10 percent. The full Cabinet will consider the proposal after examining prices in neighboring India.” Commerce Minister Abdul Razzak Dawood will head a committee to go into pricing and recommend a long-term policy after consulting all the stakeholders.
Consumer rights groups demand that the claim for a raise should be rejected, as multinational pharmaceutical companies in league with the Ministry of Health (MoH) have, over the years, raised prices several times. These prices are way high than those prevailing in India although the medicines are produced by the same multinationals.
Pakistani consumers feel that both local and foreign companies have unfairly treated them. Some 30 years ago, the then president, later prime minister, Zulfikar Ali Bhutto, and his Health Minister Sheikh Rashid Ahmad, had introduced the generic names scheme, and done away with brand names.
The prices came down, instantly. But, the pharmaceutical companies did not cooperate, as their profits declined. They soon went back to brand names, and frequent price-raising.
In India, meanwhile, things were kept under control. Prices are lower than Pakistan. A large number of medicines have been domestically developed. Even some of the most sophisticated ones are now being produced locally. Quality and price-wise they compete with United States and Europe.
I remember recently a specialist telling a cancer patient to buy the Indian-produced medicine which he said is “better and cheaper than the same one made in US.” No wonder another medical doctor who has just returned from a tour of Baluchistan and North West Frontier Province (NWFP) and the border areas says: “The whole region is flooded with cheap, smuggled Indian medicines, while expensive Pakistani brands are nowhere to be seen.” Most of the medicines are produced by the same multinationals, but the prices are way up in Pakistan than in India. The smuggled medicines are selling in Islamabad, Karachi, Peshawar, Quetta and Lahore, too. In view of this the pharmaceutical companies have two choices: (a) drastically cut prices for all medicines across the board, or buckle in before the equally good Indian medicines. They must remember that hundreds of Pakistani industrial units have already been killed because of their high prices, due to exorbitant taxes, high input costs, and cheap smuggled goods. The latest to be hit, and go into losses is Pakistan’s mighty cigarette industry, including Pakistan Tobacco Company owned by the huge multinational British-American Tobacco Company. Its annual report says, its hit by high taxation, smuggling, and tax-evaded clandestine manufacturing at home. More companies can face the same fate.
The ECC also decided to “stabilize sugar prices at Rs.26 to 27 a kilo.” In case the price goes beyond that level, import duty, already lowered from 15 percent to 10, could be “slashed to 5 percent or zero.” Remember the good old days of Nawaz Sharif government when sugar was selling at Rs.17 a kilo until 1998? Sugar production this year is estimated at 2.9 million tons, with enough existing stocks. Will the government watch out the sugar mills and wholesalers who are trying to make a still bigger bite? While the consumer prices are rising, the price of electricity — the mother of all production — is likely to become still more expensive.