The Utility Stores Corporation (USC) of Pakistan is a state-owned enterprise established, in 1971 to provide essential commodities at subsidized rates. Its primary purpose is to shield citizens, especially low- and middle-income households, from the adverse effects of inflation. By offering staple items like wheat flour, sugar, rice, pulses, and cooking oil at lower prices, the USC plays a crucial role in maintaining price stability.
Additionally, it serves as a distribution network for government relief programs, including Ramazan subsidies and targeted welfare schemes like the Ehsaas Ration Program.The USC operates through an extensive network of more than 5,900 outlets across the country, including urban centers and remote rural areas. This widespread presence ensures the accessibility of essential goods to a significant portion of the population. The corporation employs over 14,500 workers, making it a notable contributor to job creation. Its commitment to serving economically marginalized communities underscores its importance as a safety net for Pakistan’s vulnerable populations.
The USC in Pakistan should ideally be cheaper than the open market, as their primary purpose is to provide relief to the public, especially low- and middle-income households, by offering essential goods at subsidized rates. This pricing strategy ensures that vulnerable populations have access to basic commodities without being burdened by inflation and market volatility.
The government’s subsidies allow utility stores to sell items like flour, sugar, rice, pulses, and cooking oil at lower prices compared to private retailers (open market). This price difference not only stabilizes the cost of essential goods but also creates a competitive check on the open market, discouraging hoarding and artificial price hikes.
Despite having lower level of inflation (4.9%) in November 2024 as compared to October 2021 (7.2%), a comparison of utility store prices with open market rates in 21-09-2021 with that of 05-12-2024, published by Pakistan Bureau of Statistics, reveals significant price increases across both sectors, with utility store prices no longer consistently cheaper. For example, in 2021, Atta (Flour) was significantly cheaper at utility stores (PKR 950) compared to the open market (PKR 1196.22). However, by 2024, utility store prices for Atta soared to PKR 2740, surpassing the open market price of PKR 1821.84.
Similarly, Sugar was cheaper at utility stores in 2021 (PKR 85 vs. PKR 100.75 in the open market) but became more expensive in 2024 (PKR 140 at utility stores vs. PKR 133.61 in the open market). Additionally, items like Rice Sella and Tota Basmati Rice are now more expensive at utility stores, with Rice Sella priced at PKR 345 compared to PKR 304.13 in the market. These trends indicate that utility stores are losing their competitive edge for essential commodities.
Despite these shifts, some items at utility stores remain cheaper. For example, Daal Chana is priced at PKR 265 at utility stores in 2024, compared to PKR 385.04 in the open market. Similarly, White Gram is marginally cheaper at utility stores (PKR 380 vs. PKR 392.94 in the open market). These exceptions highlight that while utility stores still provide some relief, their overall effectiveness in offering subsidized goods has diminished due to mismanagement and inflationary pressures. To restore affordability and credibility, utility stores must ensure better subsidy distribution, operational efficiency, and price monitoring, enabling them to consistently offer goods at prices below market rates. These figures left vulnerable population of the Pakistanbehind in abyss to decide among cheaper or cheater.
Now with having official poverty numbers in a report, published by Ministry of Planning Development and Special Initiatives (MoPD&SI), therein, 5.56% of the population is classified as ‘extremely poor’ or ‘ultra-poor,’ which means approximately 11.75 million people require social safety net coverage. Additionally, it is important to note that 16.4% of the population (34.59 million people, including 8.25 million in urban areas and 24.67 million in rural areas) are on the borderline, where even a small push could push them into poverty. Furthermore, 20.57% of the population (43.44 million people, with 13.49 million in urban areas and 28.64 million in rural areas) are in a vulnerable situation where a minor negative shock could drive them into poverty.
In this context, the Utility Store Corporation of Pakistan can play a critical role in providing affordable goods and acting as a social safety net for these vulnerable populations. By offering subsidized items, particularly in times of economic distress, Utility Stores help cushion the impact on those at risk of falling deeper into poverty. For those classified as ‘borderline’ or ‘at-risk,’ these stores serve as an essential lifeline, helping prevent them from slipping into extreme poverty.
Maintaining cheaper prices at utility stores requires efficient management of subsidies, supply chains, and inventory. Mismanagement or corruption can lead to discrepancies in pricing, stock shortages, or poor-quality goods, undermining the purpose of these stores. Therefore, ensuring that utility stores remain consistently cheaper and reliable is critical for their role as a safety net for economically disadvantaged groups in Pakistan.
Addressing these issues requires a comprehensive approach. Strengthening governance and accountability measures can curb corruption and enhance transparency. Streamlining supply chains will ensure the consistent availability of goods, while digitizing operations can improve efficiency and management. Expanding outreach, particularly in rural and remote areas, could involve mobile utility stores or partnerships with private organizations for better logistics. By implementing these reforms, the USC can fulfill its mandate more effectively and continue serving as a critical support system for Pakistan’s population.
