TAKING note of the sharp reaction of the people to the steep rise in prices of petroleum products a day earlier, Prime Minister Shehbaz Sharif on Friday announced a reduction in the petroleum levy by Rs.80 per litre and bringing the price of petrol down to Rs.378 per litre alongside a wide-ranging relief package that includes targeted subsidies for transport, farmers and low-income consumers amid soaring global oil prices.
He unveiled the package during his late night address to the nation explaining the move was aimed at shielding the public from the burden of rising fuel costs triggered by ongoing conflict in the Gulf region. In addition to the price cut, motorcyclists will receive a subsidy of Rs.100 per litre, while goods transport, public transport and freight vehicles will also be provided a subsidy of Rs.100 per litre for one month. Under the relief measures, small trucks will receive Rs.70,000 per month, large trucks Rs.80,000, and public transport buses Rs.100,000 as monthly subsidies.
The prompt decision of the Prime Minister is what an elected leader was expected to do in the prevailing situation. There is, of course, no doubt that the country was under great economic and financial pressure due to the ongoing Iran war as well as the continued operation against the menace of terrorism. The war and the resultant blockade of the strategically located Strait of Hormuz by Iran pushed up the prices of oil but it was not a prudent approach to pass on the burden to the people disproportionately as the government did first by hiking the petrol price by Rs. 55 a litre at the very outset of the conflict and then raising the prices in an unprecedented manner on Thursday.
Economists point out that the government was misfed and it acted in haste in jacking up prices of petroleum products on the false assumption that an increase in oil consumption in March (as compared to February) meant people have the capacity to absorb a big shock. They argue that oil consumption always goes up during Ramadan and Eidul Fitr due to large-scale mobility of people and this had nothing to do with the absorption capacity of the masses. It was also widely believed that the government wanted to exploit the opportunity to mint money in the face of the inability of the Federal Board of Revenue (FBR) to meet its tax collection targets. Such an approach created an impression that the government was insensitive to the plight and woes of the people but the measures announced by the Prime Minister on Friday helped dispel this impression.
In fact, the option to neutralize the impact of a surge in the prices of oil in the international market through lowering of taxes on petroleum products was always there but the government was apparently wrongly advised and as a result it had to make a compromise after severe reaction by the parliamentary opposition and the general public. Pakistan Tehreek-e-Insaf (PTI) Chairman Barrister Gohar Ali Khan on Friday said the party would convene an all-parties conference (APC) to discuss the unjustified increase in petroleum prices and its impact on the public while the JI has announced to launch a movement against the hike.
The reaction of the opposition was so severe that the National Assembly session on Friday had to be adjourned without transaction of any of the 90-point agenda items. Indignation of the people was justified as it is a flawed assumption that provision of subsidy to select segments of the society will help upset the massive impact of the uncalled-for increase in prices of POL products. And the conditions attached to the grant of subsidy would render the majority of the prospective beneficiaries ineligible for relief making mockery of the process. Who will compensate for the income squeeze for households due to a sharp increase in fares and transportation charges as well as prices of fruits and vegetables and industrial products?
