 |
| |
WEEKLY
SECTIONS |
 |
|
 |
| Petroleum price rise to increase cost of living |
|
|
|
Saturday, July 04, 2009
By Mansoor Ahmad
LAHORE: The government on the one hand claims that it is serious in bringing down the inflation to single digit while it is taking measures that are likely increase it even above the current level.
The increase in petroleum products rates was unwarranted and would increase the cost of living the poor beyond their means. The petroleum levy replaced with carbon tax was a cruel step taken at a time when the poverty was already on rise.
The increase in petrol rates would hit the lower middle class only as currently motorcycle riders use this fuel more than the relatively affluent car users that have converted mostly to CNG. The measure would add Rs240 in the petrol bill of the bike users hardly earning Rs10,000-Rs15,000 per month. This means that they would now require 2.4 per cent additional from their present income to cope with increased rates.
The increase in diesel rates would play havoc with the budgets of lower strata of the society, as the public transport rates would be increased by at least 10-20 per cent.
Already a worker drawing minimum wage of Rs6,000 is consuming at least 10 per cent of his income on public transport, as the minimum fare of public transport from one stop to the other is Rs10. Many workers going to factory areas far from their home incur daily transport expenses of Rs40 per day or around Rs1,000 per month (25 days) on transport. They would now be spending much more.
Kerosene oil is the kitchen fuel of the poorest that has no access to piped natural gas and cannot afford to buy the LPG cylinder costing Rs600-800 in one go. Even if they were using one-litre kerosene per day the recent increase would add Rs144 in their monthly budget.
The farmers would also be badly affected, as diesel is their main source of fuel to run their tube wells, tractors and trolleys. The harvesting cost would also increase tremendously as the harvesters and thrashers run on diesel would be 10 per cent costlier.
These are the direct impact of the increase in the rates of petroleum products. The indirect impact would be in the shape of increase in the rates all essential items. The cost of transportation of vegetables, pulses, sugar, rice, wheat, oil and other commodities would increase resulting in higher rates of all these items. The flourmills in Punjab have already increased the rate of 20 kg atta bag by Rs10 the other would follow the suit soon.
The transportation cost of imports and exports would also increase substantially. The cost of a 20 feet container from Lahore to Karachi is already higher than the cost of the shipment of the same container from Karachi to China. The present increase would further put pressure on exporters. They are already operating on very low margins and are not in a position to bear further burden.
These increases would put further pressure on inflation that last fiscal averaged over 20 per cent. The government is trying to generate revenues indirectly instead of taxing those that are avoiding coming in to the tax net or have the capacity to pay more. Direct taxes would not adversely impact inflation. The indirect taxes on the other hand burden the poor more than those having resources. The impact of inflation on the poorest segment of society has been higher than the average inflation in the country during past five years due to government’s policy to spare the affluent and tax the poor.
|
|
|
| Back
| Send
this story to Friend | Print
Version |
|
|
|
ISSN 1563-9479 
