tale or story of price rises in current years is a terrible story of the
dilemma of the miserable nations who have been crushed by their government. The
reality that electricity price has risen excessively high percent since the people’s
government took over in March 2008 and up till now it could neither put awful
power load-shedding to an end nor bring the so-called circular debt down and
power supply situation has gone from bad to worse in these years. The power
tariff was so high. When the PPP (Pakistan People Party) government came to
power, electricity shortfall was so high and the circular debt stood high as
well in billion. Now when the cost of electricity has reached high unit, the
shortage has risen to high megawatt and circular debt to about in billion.
Inflation and all essential items and the resulting cost of living are up high
percents making the life of the people depressed, despite a daily loss of
billion in industrial and commercial activity. 

Pakistan economy's vicious circle

government is pleading that global oil price hike up and it is the result of
the situation now obtaining as more than megawatt electricity produced in the
country is consuming furnace oil. But the fact remains that crude prices were
approximately $110 in March 2008 when the government took the charge. This
shows that mere corruption at the highest level and lack of governance are the
factors mostly behind the situation at the moment obtaining as four years of
period is not that inadequate as to weaken in improving the situation that
appears the most horrible in the present circumstances. What the government
failed in imperfectly is that it has not been able to reduce line and system
losses in the power sector which, together with power theft at the request of
powerful groups, is accounting for the loss of at least 40 percent of the total
power production against a shortfall that, on an collectively, comes to about
35 percent.

electricity tariff alone, the government has also raised significantly the
prices of petroleum products over the past four years to add to the vicious
circle of inflation. The prices of petrol and diesel have been raised by so
many percents, between March 2008 and May 2012. As against that earnings of the
fixed income, the group has seen raise once in the entire period and that has
long been tough by the heaving grinder of the rising cost of living. Ironically
when there are hopes that the federal government will affect the increase in
salaries and pension in the coming fiscal year, provincial governments are
opposing an increase of more than 20 percent. When provinces ate getting about
70 percent of the divisible tax pool share, they must be large-hearted as much
as necessary to observe the distress of the people diminish sensibly. 


rural economy is in a Vicious Circle. Because people have low incomes due to Low Productivity,
then their savings rate is low due to low income. Due to which the pace of Capital
Formation and Investment is also very slow. Therefore, less investment could
not create more job opportunities.