Daily Times

The government’s measures to incentivise industry, particularly the decision to forego any charge for additional power used by them from November this year to June 2021, have been very rightly welcomed by all quarters. There will be no better time than the present to do whatever can be done to breathe some sort of life into the industrial sector. That would provide jobs, make us self-sufficient in production of all sorts of goods and, best of all, add to our export receipts. Right now Pakistan has an edge of sorts over regional countries only because of the progress it made in containing the coronavirus when the first wave hit Asia particularly hard. And now, even though the second wave threatens to reverse much of the gains, the economy is still running and the opportunity to grab fresh export markets should not go begging.

But there is something to be said about the type of incentives being offered. Sure, nothing has held industry down like abnormally high input costs, driven by things just like high electricity prices, so the three-quarter or so of a breather should go some way in helping producers, particularly among small and medium enterprises. Yet somebody will have to give some thought to what might happen when the government, eventually, agrees with the IMF and increases electricity prices for all consumers and also rolls out another mini-budget to raise taxes. Even if good parts of the industry continue to get cheaper electricity till the middle of next year, the drag on consumer demand will be telling, especially as cost-push inflation makes a high unemployment environment even worse.

All this is not to say that the incentives are not well meant or will not work at all. These are important baby steps yet it is important to understand and accept that they are just that – baby steps. Giving them more importance than they deserve can in fact prove counter-productive even in the immediate term if the government becomes complacent. The best thing to do is to identify yet more areas where government intervention can help stimulate industry to produce, export and earn more. There is also a very urgent need to control prices, especially in the food basket, because stimulus packages, even when targeted, tend to achieve precious little when there is an overall tendency for prices to rise. Clearly the government needs to be active on multiple economic fronts at the same time. *