Faisal Khan lives in Lahore and works as a mid-level banker, earning Rs325,000 a month. His wife, Rabia, manages the household and supplements the family income by tutoring students online. They have three children: Areeb, 14; Maham, 11; and Saad, 6.
Three years ago, Rs325,000 meant stability. Three years ago, the Khan family used to take a family vacation to Huza, Murree or Skardu. Three years ago, school fees were manageable plus two tuitions each for Areeb and Maham. Three years ago, there used to be a weekly family dinner out; Rs7,000-8,000. Three years ago, the Khan family used to save Rs50,000 a month labeled ‘university fund’.
Over the past three years, cumulative inflation has been around 70 per cent. That’s not inflation – that’s devastating, gut-wrenching destruction of purchasing power.
Faisal’s salary has since gone up to Rs375,000. On paper, that is progress. In reality, it is regression. Nominally higher, practically poorer. Taxes absorb Rs74,000. Electricity takes Rs55,000. Gas Rs9,000. Rent Rs50,000. School fees are Rs94,000. Groceries Rs70,000. What remains is Rs23,000. This must now cover: petrol, car maintenance, mobile, internet, clothing, household help and social obligations. Which means three things: no savings, no buffer, no margin.
Red alert: One fever or one more tariff adjustment and the Khan family must borrow for groceries or for the doctor’s fee. No annual vacation, no more. No tuition for Areeb and Maham, no more. Rabia now buys meat once a month, down from twice a week. Milk is diluted to make it last longer. Fruit is no longer routine – it is once or twice a month. Chicken has become occasional; pulses now fill the plate. Eggs are rationed once a week.
The air-conditioner stays off in June. The children study in the heat. Areeb’s cricket academy is cancelled. Maham’s art classes are gone. Saad’s birthday was celebrated at home – no cake from the bakery, just one baked in the kitchen. Rabia has been postponing her dentist appointment for months.
Faisal did not reduce his work. Rabia did not become careless. The children did not become extravagant. Nothing inside the Khan household collapsed – government policy did. Electricity quadrupled not because the Khans switched on more lights, but because of the government policy of capacity payments and guaranteed dollar returns. Gas did not double because Rabia cooked more meals but because the government re-wrote pricing formulas.
School fees did not climb because Areeb asked for better classrooms. They climbed because inflation was allowed to run through fuel, transport and utilities – until it landed on parents. It was government policy to socialise risks and guarantee returns to companies. Under government policy, losses were put on the public and profits were locked in for the companies.
Remember, fewer than 5-7 per cent of Pakistani households earn above Rs300,000 per month. If a household in the top five per cent has only Rs23,000 left after essentials, imagine the arithmetic for the remaining 95 per cent. When savings stop, investment slows. When confidence erodes, migration accelerates. Capacity payments now exceed Rs2 trillion annually. Power sector circular debt hitting Rs6 trillion. These numbers sit inside households like the Khans’.
Red alert: The Khans did not sign the contracts. The Khans did not index returns to the dollar. But the Khans are paying for all of it through borrowed groceries, cancelled tuition, postponed medical care – and their future.
This is not just the story of the Khan family. It is the story of an economy eating its middle.
The writer is a columnist based in Islamabad. He tweets/posts @saleemfarrukh and can be reached at: [email protected]
