Ensuring food safety
The Punjab Food Authority (PFA) is doing a good job by regularly checking the quality of food at restaurants and manufacturing units. The importance of ensuring food safety can be gauged from the fact that most visitors to developing countries from advanced countries eat only at the high-end hotels where they stay. Otherwise, they eat only peanuts and bananas. We expect other provinces too to undertake regular inspections of food points to ensure food safety. The PFA sealed 640 food points and had production stopped at 344 food outlets in September. In the same period, food safety teams imposed fines worth over Rs19 million on food business operators for violations of PFA regulations. Notices were served to 32,963 eateries while carrying out routine inspection drives across the province. PFA Director General Captain (retd) Mohammad Usman said PFA teams inspected as many as 40,526 food points in all 36 districts of Punjab. These included dairy shops, ice-cream parlours, general stores, bakeries, poultry shops, confectionery shops and food manufacturing units.
In September, food safety officials seized the carcass of a dead animal while it was being transported to Lahore from Kasur. The carcass weighed around 500kg. The PFA also carried out an inspection of 144 production units of Jams and pickles. Around 2,640 kgs of jams were found affected by fungi and 873 kgs of pickles unfit for human consumption. Fines were slapped on 26 production units for failing to adhere to health safety rules. As many as 82 food production units in Lahore zone, 29 in Rawalpindi, 26 in Multan and seven in Muzaffargarh were inspected. Food manufacturing units were sealed for using rotten stuff and for the use of prohibited chemicals. Dead flies and mosquitoes were found in pickles. In any case, excessive intake of food should be avoided. A man wrote on a piece of paper, “I am a big eater. Today, I broke the world record,” and lost consciousness, which he never regained.
A couple of days after the government’s economic team claimed at a press conference in Islamabad that the economy is on the mend and the trade and fiscal deficits have been largely in control, a World Bank report has warned of yet another macroeconomic crisis due to high fiscal deficit and low foreign exchange reserves. The report titled ‘South Asia Focus: Making (De)centralisation Work’ has forecast a further slowdown in the economy with the growth rate falling as low as 2.4 per cent during the ongoing fiscal year. The report only sees a slow recovery — to just 3.0 per cent — in the next fiscal year. But the recovery, according to the report, is relative to the success of the structural reforms having been introduced domestically as well as stability in global markets, low international oil prices and reduced political and security risks.
The current account deficit is forecast to decline to 2.6 per cent of GDP in the current fiscal year and to a further 2.2 per cent in the next as the exchange-rate flexibility is expected to support a modest recovery in exports and rationalisation of imports. In a warning sign though, the consolidated fiscal deficit, including grants, is projected to reach 7.5 per cent of GDP during this fiscal only to come down slightly, to 6.2 per cent, during the next. The public debt-to-GDP ratio will, however, remain high in the next fiscal year at 80.8 per cent, increasing the exposure to debt-related shocks, according to the World Bank report. Inflation is forecast to rise to 13 per cent in the ongoing fiscal year, with the price hike driven by a further pass-through impact of the rising exchange rate to the domestic market.
The declining growth, the rising inflation and the ballooning debt very clearly suggest a further fall in the capacity of the masses to bear the impact of the prevailing economic crisis. And all that is enough, to sum up, that poverty reduction will remain a distant dream, as also warned by the World Bank report which says that progress on this count will remain slow.
Falling auto sales
Car sales have continued to decline in the new fiscal year, with a 39% overall reduction seen in the first quarter of the current fiscal year. Some manufacturers have already begun cutting costs by reducing the number of working days at their plants, and reports suggest that Honda Atlas will observe between 16 and 18 non-production days (NPD) in October. Also, in a country like Pakistan, where people had to wait for months on end for their cars to be delivered, Honda still has over 2,000 cars ready to be driven off the lots, according to reports. Production at Indus Motor Company plants — most notably Toyota cars — has also been at less than 50 per cent of capacity, with around 15 NPDs added to the mix. Pak Suzuki has avoided NPDs thus far despite sales of some car models crashing by as much as 73% in the first quarter. The Alto has been singlehandedly keeping sales alive, despite prices for the base models jumping past Rs1.3 million.
Automakers and vendors have been quick to blame external factors such as inflation, taxes and fall in investors’ interest after the FBR began looking closely into those who may be using the car market to whiten the black money or those who are otherwise living with assets beyond known means of income. Duties on car parts and the increasing cost of car financing due to high-interest rates have also been blamed, but carmakers are quick to deflect when the subject of indigenisation comes up. Indigenisation — domestic manufacturing of car parts — remains low, and carmakers have repeatedly worked to avoid increasing it, leading to high prices as compared to those in regional markets. Allegations of collusion and uncompetitive practices to keep prices high are also rampant. Entry-level cars in India cost less than half of what equivalent vehicles do in Pakistan, thanks to competition and indigenisation. Failure to lower production costs is what is now hitting the carmakers’ bottom lines the hardest.