Surging unemployment amongst soaring inflation 

Instead of interest rate tightening, the govt should focus on containing food inflation, raising crop yields

Writing for Dawn, author Mohiuddin Aazim explains that the recent increase in fuel oil and gas prices is devastating for the majority of Pakistanis. This, coupled with higher electricity tariffs and an increase in the General Sales Tax, may cause the already high 27.5% consumer inflation rate to rise further beyond 30%. 

According to the author, the economy is also suffering, with GDP growth projected to be less than 1.5% for the current fiscal year. There is a risk of large-scale joblessness, poverty, and starvation, which could lead to civil unrest. The author calls for a national consensus to address these issues urgently. 

The manufacturing and service sectors are already showing a decline in output, which may lead to job losses. The author suggests that instead of interest rate tightening, governments should focus on containing food inflation and take measures to raise crop yields. Unless yields are raised, the country will not be able to meet its domestic requirements for major and minor food crops.

The author says that In various regions of the world, such as Asia, there has been a significant challenge with food scarcity. The ongoing war between Russia and Ukraine has worsened the issue of food shortages globally. Currently, an estimated 349 million individuals across 79 countries are facing severe food insecurity, according to the World Food Programme. 

In Pakistan, the super floods of 2022 have also negatively impacted food supplies. The production of essential foods like rice, wheat, and maize have fallen below targets, and there is a scarcity of pulses and vegetables such as onions. This scarcity, combined with a weak rupee, has led to high food inflation.

Price controls alone are insufficient to contain such high levels of food inflation, and other measures must be taken. Major and minor food crops require special attention and must be developed with better technology and seeds to meet domestic requirements. 

There is a need to minimize pre-harvest and post-harvest losses, and the productivity of farmworkers must be enhanced. Pakistan’s agricultural output per worker has only increased by less than 0.7% per year in the past three decades, compared to the four-times higher average in South Asia, according to a recent World Bank report.

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