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Countering hoarding, speculation: ECC decides to release one million tons of wheat to provinces, mills




  • Members of the Economic Co-ordination Committee (ECC) of the Cabinet on Thursday decided to release one million tons of wheat to provinces and flour mills at Rs 1,100 per 40 kilograms to arrest the price hike. They said that the current increase in the price of wheat flour was because of speculation and hoarding. 

    The ECC meeting, presided over by Finance Minister Dr Abdul Hafeez Shaikh, was informed that the current wheat flour price hike was artificial, as there was no shortage of wheat in the country. Sources said that the ECC was informed by the managing director of Passco that provinces had been selling wheat at Rs 1,150/40 kg. 

    Analysts say that the government decision to increase the wheat support price to Rs 1,200 /40 kg for the next crop had led to the increase in flour price. The ECC, in order to check the rising trend in flour prices and to discourage hoarding, decided to immediately release a million tons wheat to the provincial governments, through Utility Stores Corporation”s outlets and local traders/floor mills at a price of Rs 1,050/40 kg of wheat for the crop year 2009-10 and Rs 1,100/40kg of wheat for the crop year 2011-12. The ECC also decided to immediately supply required wheat to all provinces. 

    Former Adviser to Finance Ministry Dr Ashfaque Hasan Khan wondered how could anyone distinguish between last year and current year wheat. He said that wheat would be sold at Rs 1,200/40 kg and the price of flour would shoot up to Rs 42-Rs 45 per kg. Inflation is going to hit the country hard, he added. The ECC decided to form a committee, comprising Minister for National Food Security Mir Israrullah Zehri, Minister for Science and Technology Changez Khan Jamali, Minister of State for Production Khwaja Shiraz, Special Assistant to the Prime Minister Kamal Majeedullah and the Secretary of the Ministry of National Food Security for devising ways and means in conjunction with provincial governments to ensure wheat availability. 

    On a summary moved by the Finance Division, the ECC approved abolition of investment limits for NIT-State Enterprise Fund. With the approval of the summary, NIT has been allowed to trade freely to keep balance in the prices of eight listed companies in which the government of Pakistan has substantial shareholdings. On a summary of the Federal Board of Revenue (FBR), the ECC approved a reduction in the rate of the Federal Excise Duty (FED) for sugar mills as an incentive for export of sugar at 0.5 percent instead of 8 percent levied on production and supply of sugar. 

    The reduced rate of duty would be applicable on the quantity of local sale of sugar equivalent to the quantity exported by sugar manufacturers in accordance with the export quota allotted and would be available on submission of proof of such export. The balance local supply would be subject to FED at the rate of 8 %. The ECC approved a summary by Ministry of Commerce seeking approval for grant of freight subsidy to facilitate the export of sugar. The ECC approved Rs 1.75/per kg, which will be provided from export development fund. 

    In order to overcome the shortage of natural gas for industrial sector, the ECC also approved injecting LPG air-mix equivalent to 50 MMCFD gas into dedicated network for provision to industrial sector. The price impact will be borne by the industrial sector only and domestic consumers will not be affected. Secretary Water and Power briefed the ECC over the energy situation in the country. It was informed that there is a generation of 8500 mw in the country and the demand is around 12000 mw. There was a shortage of 3,500 megawatts in the country and the Ministry was working hard to fill the gap. 

    Finance Secretary gave a detailed presentation on the state of economy. He stated that despite global financial crisis, floods, high oil prices and bad security situation, the government had been able to maintain macroeconomic stability in the country. He said that there had been an unprecedented increase in exports and foreign remittances during the last four years. The revenue collection was also at a record level and during the last six months there was an increase of 7.1 percent. 

    The government disbursed Rs 218 billion through BISP and Baitul Maal while there had been 120 percent increase in pay and pension of employees in the same period. It was informed that the inflation rate which stood at 25 percent in 2008-09 has now been brought down to 9 percent only. The growth rate has increased from 1.7 percent in 2008 to 4.3 percent projected for year 2012-13. Agriculture sector also showed remarkable growth from 0.6 percent in 2008 to 3.8 percent projected for year 2012-13. 

    Copyright Business Recorder, 2013

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