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Friday December 09, 2022

The petrol shock

By Editorial Board
February 17, 2022

At a time when people can barely afford to part with even a single rupee from their heavily strained budgets, the federal government has announced a dramatic rise in the prices of all petroleum products, with the increase ranging from Rs10 to Rs12 on average. Analysts believe this may be the highest rise in petroleum prices at one time ever recorded in the country’s history. It comes because of the increase in global petroleum prices and also because of the IMF demand for the levy on petrol, with Pakistan needing to make this provision, if it wishes to remain within the IMF programme. The opposition parties have immediately come out in condemnation of the increase with all the major parties, including the PML-N, the PPP, the JI and others, condemning it as an anti-people move, which will drive people towards further misery and simply indicates the indifference of the government to their plight.

The woes of the citizens of Pakistan are likely to multiply manifold with the historic hike in prices of petroleum products. With a populace that is already reeling under pressures of unprecedented inflations and depreciating rupee, this recent increase is heartless to say the least. When the government committed to the IMF additional petroleum levy, even at that time most independent economists and observers were highly apprehensive of this step. In the long run, such an increase invariably results in further inflation and high cost of production and transport. It is worth recalling that the government had last increased the petrol prices by three rupees to nearly 148 rupees per litre on Jan 15, and now it has been increased to nearly Rs160.

The question that needs to be asked is just how people are expected to cope. The government is offering no one answers, suggesting no form of relief. The current increase will stay in place till at least February 28th and reviewed after that in accordance with global rates which will determine if any adjustment is to be made. To many this seems unlikely. The inflation brought under the PTI government has already driven people to desperation. This latest hike in petroleum goods will only worsen the situation and make it even more difficult for people to work out a means to survive. This applies not only to the lowest income groups, but also those falling in middle brackets and the salaried classes too. The government needs to face the fact that people are barely able to survive. They have to find some strategy to enable people to manage and escape the current situation now made worse with the latest price hike.

The government must prevent further devaluation in Pakistani rupee to forestall more price increases of petroleum in future. Every time the government has increased petroleum prices, there has been a corresponding surge in inflation. Though the GST rate on all these products remained unchanged, the increase of levy on all petroleum products by four rupees per litre just to honour the commitment made with the IMF will have a devastating impact. For its part, the government appears to be blissfully oblivious of the gravity of the financial condition of the common people.

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