AS was expected, in his address to the nation, Prime Minister Shehbaz Sharif announced a major relief in the price of petroleum products in the backdrop of a significant reduction in the price of oil in the international market.
As per his previous commitment about passing the relief to the common man, he announced reduction of price of diesel by Rs 40.54.
The price of petrol has been reduced by Rs 18.5 and that of diesel by Rs 40 per litre. This is, indeed, a major relief for individual consumers as well as the national economy as the reduction in prices would help alleviate their sufferings to some extent in the given difficult period.
However, as we have been pointing out in these columns in the past, the real issue is the trickle-down effect of this significant relief for the common man.
No doubt, those owning vehicles will benefit from the decision but based on the past experience it is highly unlikely that the industry, transport and other services sectors would pass on the due benefits to the ordinary citizen.
Transport fares were increased disproportionately by transporters and they are in the habit of not passing on the entire relief to the people.
Similarly, price of different products and services were also increased by industrialists and service providers every time when the Government jacked up the price of petroleum products.
It is the test of the administrative machinery of the Government to ensure that the genuine benefit is passed on to the end consumer.
We also believe that the actual benefit of the reduction in the price of oil in the international market has not been given to people of Pakistan mainly because of highly fluctuating exchange rate with rupee crossing 210 a dollar as well as the condition agreed by the previous government with the International Monetary Fund (IMF) to increase the petroleum levy every month for six months.
There is also a genuine feeling that the incumbent Government has lopsided calculated the new rates of petroleum products as the price reduction in petrol does not reflect the proportionate reduction of oil prices in the international market.
The Government needs to do something to arrest the dangerous slide in the value of the rupee.
The PML(N) Government has demonstrated capability of stabilizing the rupee for a considerable period and it can definitely deliver on this front now.
So far, the Government watched devaluation of rupee as a silent spectator possibly because of the pending decision of the IMF on revival of the stalled package but now that a staff level agreement has been reached with the Fund, it is hoped the authorities concerned would focus attention on this issue.
Once the rupee stabilizes at a reasonable level, the problem of unending price-hike would become manageable and people would heave a sigh of relief.
The Government can no longer watch the situation silently as volatility in exchange rate, coupled with cost of production and commercial operations, has rendered a number of industries and businesses as non-profitable forcing entrepreneurs to shut down as has recently been done by the Airlift.
Several other start ups and services including Swvl and WavaCars had to be discontinued in the recent past due to the difficult economic environment.
No doubt, all this is not the outcome of the policies of the incumbent government but people do not expect such things during the tenure of a government rightly known as business and industry friendly.
Financial woes of the Government would ease after resumption of the suspended IMF aid, which would also clear the way for release of assistance from bilateral and multilateral donors.
It is, therefore, time that the Government starts devising and implementing policies and strategies that could help contribute towards the stated objective of the Government to say goodbye to the IMF for ever.
The Prime Minister has expressed the confidence that this would be the last IMF programme but this would require sound planning for the purpose.
Intensive consultative process should be initiated with all stakeholders including institutions having an effective say in national affairs as well as opposition and industrial and commercial sectors to forge consensus on the way forward.
There is no escape from expanding the tax base so that tax collection is increased to a level that suffices to meet at least essential expenditure on running of the state.
The declaration of the Prime Minister to focus on three sectors – agriculture, information technology and export-based industries also augurs well for the overall economy.
