ISLAMABAD: Minister for Planning, Development and Special Initiatives, Asad Umar said the world was passing through a critical and extraordinary period of extremely high commodity prices and Pakistan was no exception, hoping that the prices might start receding from March next year.
“The situation might remain same till March 2022, however as per projection of the international experts the prices of the commodities might start receding to normal level from March to June next year”, he said while addressing a press conference here.
He said the prices of petroleum products and other commodities were still low in Pakistan compared to other regional countries mainly due to smart lock down policy during COVID-19.
Rejecting the perception that per-capita income in other countries especially in India and Bangladesh was higher therefore their purchasing power is also good, Asad Umar pointed out that poverty rate in Pakistan was far lower compared to India and Bangladesh which meant that the purchasing power in Pakistan was comparatively better.
He said the COVID pandemic had badly affected the big economies including US, China, UK and other developed countries where the economic growth went down by over 10%. Now as the sectors are being opened up in across the world, the demand of commodities had surge that created shortage in the market leading to price hike in across the world, he added.
The minister informed that in order to protect lower segment of the society from shocks of inflation, Prime Minister Imran Khan would announce details of targeted subsidy programme in few days and the people would start getting relief through the programme from next month.
He said the government was also reducing the Sales Tax on cooking oil from 17% to 8.5%, customs duty from Rs 1000 per tonne to Rs 5000 per ton besides completely withdrawing the 2% additional customs duty that would help easing the cooking oil price in Pakistan by around Rs 50 per kilo.
The minister said according to the World Bank, crude oil witnessed 81% increase in one year while in Pakistan petrol price was increased by only 17%. Similarly price of Liquified Natural Gas (LNG) surged by 135% during the period while it increased by 64% in Pakistan. He explained that in Pakistan, only 25% consumed LNG whereas price for domestic gas consumers did not increase during the year.
Similarly, he said price of cooking oil rose by 48% in international market and 38% in Pakistan, that of sugar surged by 53% internationally and 15% in Pakistan, Urea fertilizer price surged y 67% in international market and 28% in Pakistan.
Although the prices of the commodities are comparatively low but still a significant hike has been witnessed in Pakistan too thus badly impacting the purchasing power of common men, he admitted.
With respect to taxes on petroleum products, Asad Umar explained that earlier the GST on petrol was 17% and Petroleum Development Levy (PDL) was Rs 30 per liter, however now in order not to pass on impact of international price hike in brent crude oil, the government had reduced GST to 6.8% and the PDL to Rs 5.6 per liter only.
The minister added that GST on High Speed Diesel had also brought down from 17% to 10% while the customs duty per liter was Rs 9.27 on petrol and Rs 8.81 on Diesel.
Recalling the tax rates on petroleum products during previous government led by PML-N, Asad Umar said, then government had charged tax worth as high as Rs 101 per liter and average of Rs 52 per liter during the whole tenure, but now it was less than half of the average tax of previous government, adding that at some stages, the present government had to charge zero PDL to pass on maximum relief to the people.
The minister said Prime Minister Imran Khan had already provided maximum relief in terms of taxes on the petroleum products and henceforth there would be little room in this regard.
Asad Umar added that under Ehsaas programme, the government was providing relief of over Rs 260 billion compared to Rs 121 billion in 2018.
Replying to a question, the minister said Prime Minister did not wait for the International Monetary Fund (IMF) programme and initiated reforms in key sectors even before the programme.
Replying to another question, he said the incumbent government had taken actions against various mafias and cartels, however he regretted that since the cases were pending in court so the government was helpless in punishing the culprits till the conclusion of the case.
When asked why the present IMF programme was very strict and inflexible, the minister explained that due to worst economic policies of the previous government, macroeconomic sectors needed drastic reforms therefore the IMF was very strict.
He said the previous government had thrown US$ 8-10 billion in the market only to maintain the exchange rates that resulted in plunging of foreign exchange reserves and surge of current account deficit to as high as $20 billion.