Fuel prices hike: Impact on economy its solution
THE recent increase in fuel prices across Pakistan has been a cause of great concern for many citizens either they belong to poor or elite. Not only has it led to an increase in the cost of living, but it has also had a significant impact on the country’s economy.
The primary reason for the fuel prices hike is the rising international oil prices and devaluation of local currency against US dollar. Since Pakistan imports most of its crude oil and its quantity is increasing by every passing year. This is compounded by the fact that the country has to purchase foreign currency to pay for these imports. This has resulted in a decrease in the value of the Pakistani Rupee, as well as an increase in inflation.
The economic impact of the fuel price hike is far-reaching. It has led to an increase in the cost of production, which in turn has affected businesses and consumers alike. Consumers are left with reduced disposable incomes, while businesses have to increase the cost of their products and services. This has a ripple effect on the overall economy, as the reduced consumer spending leads to a decrease in the demand for goods and services, leading to further economic decline.
The government of Pakistan has proposed various measures to counteract the effects of the fuel price hike. These include subsidies on fuel, the adjustment of taxes, and the reduction of the import duty on fuel. But due to lending from an American based lending firm for combating prevailing economic crisis, government has to impose more taxes on fuel in the form of GST or levy.
In the current scenario, the government has to introduce a package of economic reforms to help cushion the economic impact of the fuel price hike. It is clear that the government needs to take action in order to address this issue and ensure that the country’s economy remains stable and people could bear the burden of fuel prices hike. However, it is important to note that these measures are unlikely to be effective in the long run. The only way to ensure that the economy does not suffer from the effects of the fuel price hike is to reduce the overall demand for fuel. This can only be achieved by increasing the availability of alternative sources of energy, such as solar power, geothermal energy, hydro-power, ocean energy, bioenergy, and wind power.
The government should also focus on improving the energy efficiency of the country’s production and transportation systems, so that there is less dependence on petroleum. The government should also focus on green finance and green investments. Many of developed and underdeveloped countries are now focusing on the green finance and investment.
The fuel price hike has had a significant impact on the economy of Pakistan. Unfortunately, the only way to ensure that the economy does not suffer from these effects is to reduce the overall demand for fuel. This can only be achieved by introducing alternative sources of energy. Such measures will help to ensure that the country’s economy continues to grow, despite the fuel price hike.
—The writer is Chief Editor, IJSS, Islamabad.
