On November 30, around three or four armed men in a car reportedly abducted a young woman, Dua Mangi, from the city of Karachi in Pakistan. Haris Fatah Soomro, who was accompanying Mangi, was shot at and severely injured.
According to the Karachi police, it appeared “to be a case of kidnapping for ransom as ascertained by the investigation.”
Mangi returned home on Saturday, seven days after the incident, according to a statement issued by Karachi South Zone DIG’s office. According to initial reports, she returned home after the family paid ransom to her abductors.
In the same fashion, earlier this year in May, a girl, Bisma, was kidnapped from the same vicinity in Karachi. According to reports, Bisma also returned home after her family paid ransom to her kidnappers.
Citizen Police Liaison Committee (CPLC) published a report earlier this year that indicates an alarming increase in street crimes in Pakistan, especially in Karachi. The report states that “around 36,320 mobile phones and 34,000 vehicles were stolen in the city” in the first ten months of the year alone. The figures are much more startling from those portrayed by the very same committee’s report in 2018. Street crime has increased at a frightening rate during the last year, and this is after the Sindh Police set up the ‘Street Watch Force’ for the prevention of street crimes in Karachi.
According to the Crime Statistics of Pakistan, there has been a rapid increase in the number of street crimes reported in Pakistan over time. Several factors are responsible for this increase in street crime – major being high unemployment, a general increase in poverty, and a rising rate of inflation. Some other non-economic factors are also responsible.
In 2019, two things have been in the news consistently: low economic growth and high prices. Weak economic growth leads the general public to unemployment and eventually to poverty. Inflation hits the middle and low-income groups, decreasing their purchasing power for even the most essential consumption.
What is inflation?
Inflation is ‘a sustained increase in the general level of prices’ and not just the rise in the price of a few products. According to G. Ackley, inflation is “a persistent and appreciable rise in the general level or average of prices.” Studies indicate that inflation is “not just the high prices in general; it is the constant state of the rising overall price level.” Hence a sudden rise in prices is not inflation, but it is difficult to ascertain if the price increase is sustained or not. This fact makes it difficult for economists to come up with a clear definition of inflation.
According to Trading Economics, Pakistan’s inflation rate “increased to 12.28 percent in November 2019 from 11.08 percent in the previous month.” The report further states that every month, “consumer prices went up 1.20 percent, following a 1.0 percent gain in the previous month.”
What is a street crime?
Crimes that mostly take place in streets, parks, any open public spaces are called street crimes. These crimes mainly include drug dealing, abduction, prostitution, street assaults, street robberies, graffiti, vandalism, and social incivilities. These crimes often lead to serious emotional and physical injuries and in more unfortunate cases, even casualties.
What is an inflation-crime nexus?
According to the UNODC report Monitoring the Impact of Economic Crisis on Crime, crime can increase during economic crises, petrol crises, and different crises. The report states that “during periods of economic stress, the incidence of robbery may double, and homicide and motor vehicle theft also increase.”
Studies show that there is a direct relationship between inflation, unemployment, and crime rate. They indicate that people will take up criminal activities if it is difficult for them to maintain a particular lifestyle due to increasing inflation and general unemployment. According to these studies, unemployment is like a shock effect that leads to an individual engaging in criminal activities.
Inflation reduces purchasing power, inevitably increasing the general cost of living. This change doesn’t take place overnight, but as inflation increases, crime rates, in particular, street crime rates, increase.
By increasing the gap between price and wage adjustments, inflation decreases the real income of labor, hence destroying a salaried individual’s confidence in the existing institutions. All of this results in a significant loss of social control and decreases the economic ability of people in general.
But Pakistan’s inflation problem is nothing new. Pakistan’s economic ups and downs, low exports, high inflation rates, growing fiscal and current account deficit, are now an old story. See inflation in Ramadan.
According to statistics, the “average inflation rate in Pakistan was 7.78 percent from 1957 till 2019, reaching a high of 37.81 percent in December of 1973 and a low of -10.32 percent in February of 1959.”
About 40 percent of Pakistan’s population is living below the poverty line right now, in remote rural areas where it is already tough to find a good source of income. People who are earning a daily wage of not more than Rs100 per day can resort to street crime, according to several studies.
How can this situation be improved?
According to a study, “inflation and crime rates are co-integrated with a positive relationship, and the causal link is from inflation and unemployment to crime.” This study indicates that a low unemployment rate does not automatically mean a flat crime rate since the crime rate has a direct relationship with the inflation rate as well. It is only by reducing both inflation and unemployment rates that the overall crime rate will decrease.
Following steps can be useful to reduce inflation:
The first solution to tackle inflation:
The government should be transparent regarding the details of the IMF’s Extended Fund Facility. This fact can help reduce the rumors in the financial markets regarding how the flexible exchange rate should behave. There should be communication between the Ministry of Finance and markets about how all of these variables will function.
Second solution:
The government should reconsider indirect taxes, as according to economists, these taxes have the most adverse impact on the poorer classes. Indirect taxes are imposed on the final price for goods or services. These taxes fall under the provincial government, which imposes them to control who purchases certain items or to discourage people from purchasing certain products, for example, cigarettes. In theory, people reconsider their decisions to buy goods that carry an additional tax on their sales price. However, in Pakistan, more than half of tax revenue is typically derived from indirect taxes, as the country has low rates of ‘direct’ tax collection.
Third solution:
The government should come up with ways to increase savings of the poor as their savings that will eventually take them out of their financial troubles. The next wave of production in the economy also starts with the help of savings. One way of tackling this problem is to increase the minimum wage to the level of the living wage. The government should check with employers to see that they are implementing the minimum wage laws in Pakistan.
Fourth solution:
The government’s Ehsaas Programm should target the informal sector labor and the disabled segments of the population. The government should improve the stipend facility provided to people as this is one of the ways with which the government can protect them from the impact of inflation, if only for the short term. One strategy would be to allow the poor, all access to loans, so they could use it for self-employment, as a small investment goes a long way. Similarly, the government should implement innovative ways of administration at places like the Pakistan Bait-ul-Mal.
The fifth solution to tackle inflation:
Most of the people who are victims of low economic growth or high inflation rates are those who don’t know how to protect themselves from it and how to improve their economic conditions. They have no idea how to defend their household savings from erosion due to inflation. This is why schemes like the National Savings Schemes should increase outreach and should offer better rates to those who are facing unemployment and a consistently rising inflation rate at the same time.
Other measures:
Apart from the above steps, a significant role should be played by police, social workers, and the general community to curb street crime. Some of the solutions that can be implemented are the installation of cameras over the dark corners of streets, improved measures by the police for patrolling at night, ring-fencing of those areas where these crimes are usually committed, and combing operations. However, these are slightly long term solutions that need time to develop together with considerable financial investment. For the time being, however, the facility of community policing can be utilized to tackle this problem.
Conclusion
Inflation in Pakistan is, more often than not, the result of fiscal indiscipline and consistent rupee depreciation. However, increasing taxes on expenditures will result in a decrease in the general purchasing power of the public, eventually resulting in street crime and havoc in general. By implementing possible solutions, it is still possible to control the ensuing mayhem in the country.
