The Impact of GST on Packaged Milk for Consumers

The introduction of an 18% GST on packaged milk in Pakistan, part of the Federal Budget 2024-25, is poised to have severe repercussions for consumers, particularly affecting lower to middle-income households and vulnerable populations.

Affordability Crisis

Milk is a fundamental dietary staple, essential for the nutrition and health of children, the elderly, and women. With 64% of Pakistan’s population earning less than PKR 52,000 per month, the increased cost of milk from PKR 300 to PKR 370 per liter renders it unaffordable for many.

A typical family of four, requiring approximately 64 liters of milk monthly, would now face an expense of PKR 23,680, which constitutes a substantial 32% of their monthly income. This financial burden is untenable for most households, leading to potential dietary compromises.

Milk is not a luxury but a necessity. It provides vital nutrients such as calcium, vitamin D, and protein, essential for growth and health. The increased cost is likely to force many families to reduce milk consumption, leading to nutritional deficiencies and exacerbating malnutrition. Currently, 34% of children under five in Pakistan suffer from stunting, a measure of chronic malnutrition. The GST hike threatens to worsen this crisis, particularly among the most vulnerable segments of the population.

Nutritional Impact

Milk is critical for the development of children, providing essential nutrients necessary for growth. For the elderly, it helps maintain bone health and overall wellness. Women, especially those who are pregnant or breastfeeding, require adequate milk intake for their health and the health of their babies. The significant increase in milk prices due to GST will likely lead to decreased consumption, thereby increasing the risk of malnutrition and related health issues.

The potential reduction in milk consumption due to higher prices can have long-term health impacts. Children who do not receive adequate nutrition may face developmental challenges, affecting their cognitive and physical growth. Malnutrition, stunted growth, and wasting can lead to a weak nation. Instead of producing engineers, doctors, lawyers, educating, industrialists, and more, we will produce inefficient and incapable population and increase our health bill of the nation. In adults, particularly the elderly, insufficient calcium and vitamin D intake can lead to bone-related issues such as osteoporosis, increasing the risk of fractures and other health complications.

Economic and Social Implications

The financial strain caused by the GST on milk will force households to reallocate their limited resources, potentially cutting back on other essential needs such as education, healthcare, and utilities. This reallocation can lead to broader social issues, including increased poverty and reduced quality of life. The burden of high milk prices disproportionately affects low-income families, widening the socioeconomic gap and leading to greater inequality.

The rising cost of milk can also contribute to overall inflation. As milk is a staple commodity, its increased price can have a cascading effect on the prices of other goods and services, further straining household budgets and reducing consumer purchasing power.

Conclusion

The GST on packaged milk poses a severe threat to the nutritional well-being of Pakistan’s population, making this essential food item unaffordable for many. The government must reconsider this tax to ensure milk remains accessible to all, safeguarding the health and future of the nation. Policies that focus on improving the affordability and availability of essential nutrients are crucial for the country’s long-term health and socio-economic stability.