Chief Secretary Punjab orders deflation

Transportation fares and prices of essential food items to be reduced in line with reduction in petrol prices, smuggling of wheat and fertiliser to be curbed.

Punjab Chief Secretary, Kamran Ali Afzal, in a meeting held on Saturday at the Civil Secretariat, directed all deputy commissioners (DC) to ensure reduction in the prices of essential commodities and transport fares in proportion to the decrease in prices of petroleum products.

However, the complete implementation of this order might not be possible due to some inherent systematic limitations.

Fixing Transportation Fares

The district transport authorities fall under the direct control of the DC who has the power to ensure that fares are charged according to the approved rates. 

However, due to the size of the market, it might not be possible for the district administration to implement a revised price throughout the province. 

Further, the inter-city AC bus services are not regulated under the price mechanism of the department. Hence, they are free to charge prices deemed appropriate by them according to the nature of facilities provided.

Reducing Commodity Prices

As per the regulations, the definition of essential commodities primarily includes vegetables, meat, spices and other essential cooking ingredients. 

The mechanism to fix prices of these commodities is laid under the Price Control and Prevention of Profiteering and Hoarding Act 2021. As per the act, the DC has the powers to fix the price of an essential commodity. 

How is it done? Basically, the commodity prices are set mainly through negotiation with relevant trade associations. The district price control committee proposes a price arrived at by adding a reasonable margin to the cost of the commodity. 

This price is then presented to trade associations with whom negotiations are conducted to reach a converging point. However, the final decision is of the district administration. 

Practical Limitations 

Profit reached out to a few members of Punjab district administration to get a better understanding of the practicality of the chief secretary’s order. 

The officers explained that an across the board price reduction is practically impossible due to three reasons; (1) Trickle down effect of oil price reduction will take time to reflect in commodities markets (2) The essential commodity market is highly informal and scattered (3) The trader associations have substantial leverage over the city administration.

Smuggling of fertilisers and wheat

The Chief Secretary also directed the administrative officers to continue measures for eradication of smuggling of wheat and fertilisers. 

In the past, a shortage of wheat and fertilisers was created in the country due to the smuggling of these commodities to Central Asia. 

The demand for Pakistani fertiliser is high in these regions due to its quality and low pricing. Therefore, the dealers of the commodity smuggle it out of the country to earn better magins.

The FBR is considering the implementation of a track and trace system on fertiliser production that can also help to curb the smuggling.

 

 

 

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Ahtasam Ahmad
The author works as a Sector Analyst at Profit and can be reached at [email protected]

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