Overburdening the masses

DESPITE the fact that international oil prices are still hovering below $70 a barrel, the government on Wednesday once again enhanced the prices of petroleum products with petrol increased by Rs 2.98, diesel by Rs 5.92 and that of Kerosene oil by Rs 5.94. Over the last few months, the prices are continuously being enhanced with people and the business community genuinely worried that the upward trend will push up the prices of essential commodities and transport fares besides further reducing the competitiveness of our products in the world markets.
The increase in petroleum products prices will have negative impact on business and economic activities and further add to the problems of salaried class and low-income groups. Already if one looks at the December inflation rate, it went up to 4.6% due to increase in petroleum prices and regulatory duty and we have no doubt in saying that the recent surge will only further cut the purchasing power of the consumers and lead to further slump in business activities. In the first place, we believe that international oil prices at about $69 a barrel are still at reasonable level as the market, due to dependence of the US on domestic shale oil production, has not reached the highest levels seen from 2010 until mid 2014 when oil prices had crossed $110 a barrel. Given the current trend in world oil market, we understand that the government still can keep the prices low and provide relief to the masses by cutting heavy taxes and duties on the petroleum products to save the trade and industry as well as the general public from further troubles. One of the reasons behind the increase may be the depreciation of rupee against dollar which itself has multiple adverse impact for the economy as it pushes up the country’s external debt. Therefore it is advisable for the government to ensure rupee-dollar parity at a reasonable level. Rupee devaluation has fewer benefits but its costs are much higher. Since it is also election year, it will be better for the government to focus mainly on addressing the woes of masses and give maximum possible relief to them.

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