QUIETLY and below the radar of the political storms engulfing the country, the cabinet of Prime Minister Shahid Khaqan Abbasi has been approving one decision after another with far-reaching consequences. In the recent past, it has deregulated the price of diesel, increased the margins allowed to oil-marketing companies and dealers, committed to an ‘incentive’ for exporters with significant implications for the fiscal framework, allowed an increased pass-through of losses in the gas sector to consumers as a means of alleviating the liquidity constraints of the state-owned gas companies, and much more. Given the roar of politics, this sweeping exercise of executive power may sound mundane to most people, but the consequences of these decisions are going to be felt by large numbers of people for years to come. For that reason, they deserve more scrutiny than what they are currently getting.

At one level, it is unfair to fault the prime minister for his decisions. He is walking a tightrope by staying out of the politics he is surrounded by, while at the same time doing whatever is in his power to prevent the economy from being buffeted by its own internal imbalances. This silent approach to politics reminds one of previous ‘technocratic’ prime ministers, who also took momentous decisions without much regard for the consequences for the common man. Take the example of deregulating diesel. This is a fuel with a highly inelastic demand, and its price intimately affects the cost of transport and mass transit since much of the country’s fleet of trucks and buses runs on this fuel. Now that its price has been handed over to the oil-marketing companies, where the level of competition is not very high, the likelihood of steeper increases is elevated, with direct repercussions for the common man.

This technocratic approach of the new cabinet is at least partially the product of necessity, given its shallow political roots in the current scenario. But in significant part, it is also the result of a highly compliant posture for the vested interests of big business. The prime minister himself comes from a business background, and his two close advisers are also pulled out of industry. In the short term, these decisions might sound like a good way to clear the piling up of obligations on the state’s account, but beyond the short term they have the effect of raising living expenses for the citizenry and the costs of doing business for industry, besides passing the cost of the dysfunctions that afflict our state and economy to the citizens. It is true that in the current political scenario it would be optimistic to expect more; nevertheless, the prime minister should not lose sight of the fact that his party has to run for elections very soon.

Published in Dawn, October 8th, 2017