Journalists label petrol price hike 'unacceptable and brutal', economists call it 'unavoidable adjustment'

Published June 2, 2022
Motorists wait to fill their vehicles' tanks at a petrol station in Islamabad following an increase of petroleum prices by the government on Thursday. — AFP
Motorists wait to fill their vehicles' tanks at a petrol station in Islamabad following an increase of petroleum prices by the government on Thursday. — AFP
Motorists wait to fill their vehicles' tanks at a petrol station in Islamabad following an increase of petroleum prices by the government on Thursday. — AFP
Motorists wait to fill their vehicles' tanks at a petrol station in Islamabad following an increase of petroleum prices by the government on Thursday. — AFP
Motorists wait to fill their vehicles' tanks at a petrol station in Islamabad following an increase of petroleum prices by the government on Thursday. — AFP
Motorists wait to fill their vehicles' tanks at a petrol station in Islamabad following an increase of petroleum prices by the government on Thursday. — AFP

Reactions poured in after the government raised the prices of petroleum products on Thursday, just a week after the last price increase.

The government tonight announced that it had decided to raise the prices of all petroleum products barring one by another Rs30. After the latest round of hike, petrol will be priced at Rs209.86, diesel at Rs204.15, kerosene oil at Rs181.94 and light diesel at Rs178.31. Only kerosene oil's price was hiked by less than Rs30.

The economists were of the view that the decision to withdraw petrol subsidy should have been taken earlier, while also warning that the worst is not over yet.

Pakistan Initiative at Atlantic Council's South Asia Centre Director Uzair Younus reminded the public that even at the new price level, "there is still a 9 rupee subsidy on petrol." He advised the public to set aside another "80 rupees or so" since he said the petrol price should ideally be at Rs285 per litre.

Ahmed Jamal Pirzada, a Bristol University economist, said the price increases were "unavoidable adjustments". He predicted that with the current situation in the international markets, the government would have to raise energy and electricity prices even further in the future.

Talking to Dawn.com, macroeconomist Sajid Amin Javed said the "steep" price hike would cause a high inflationary impact and put added pressure on the people. However, he said that there was no other option since if prices were not increased then Pakistan would have lost its IMF programme and been left with foreign exchange reserves for only six more weeks.

Javed said the last government's "myopic" behaviour was to blame for the current crisis since it had given a subsidy soon before its departure. However, he said the current government had also committed a mistake by not taking the nation into confidence earlier and taking its time in increasing the prices.

He said the government should completely eliminate its "unproductive" petrol subsidy since it could not afford to maintain it.

Javed said the government also needed to expand the scope and duration of its relief package for those deserving of aid. He added that the IMF did not have an issue with social protection programmes and so part of the money saved through the reversal of the subsidy could be diverted to such initiatives.

Among other measures, he said the government needed to crack down on hoarding and profiteering, engage district price control committees and restore higher slabs for taxable income. All these steps in conjunction could help to control inflationary pressure, Javed added.

'Mother of all bombs'

Those from the media fraternity were more concerned with the impact the hike would cause on the public. Veteran journalist Mubashir Zaidi labelled the price increase as the "mother of all bombs", adding that the public would be "strangled" by it.

Senior journalist Mazhar Abbas called the price rise "unacceptable and brutal".

Senior journalist Raza Ahmad Rumi said there was no other choice for the government except to take "tough decisions".

Asif Farooqi, Pakistan editor for BBC Urdu, said the real worry was that a large chunk of the lower middle class were slipping below the poverty line due to inflationary trends.

Activist Ammar Ali Jan said it was easier for the rulers to keep on "increasing fuel prices than presenting a coherent plan".

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Slow start
Updated 15 Jun, 2024

Slow start

Despite high attendance, the NA managed to pass only a single money bill during this period.
Sindh lawlessness
Updated 15 Jun, 2024

Sindh lawlessness

A recently released report describes the law and order situation in Karachi as “worryingly poor”.
Punjab budget
15 Jun, 2024

Punjab budget

PUNJAB’S budget for 2024-25 provides much fodder to those who believe that the increased provincial share from the...
Budget and politics
Updated 14 Jun, 2024

Budget and politics

PML-N, scared of taking bold steps lest it loses whatever little public support it has, has left its traditional support — traders — virtually untouched.
New talks?
14 Jun, 2024

New talks?

WILL this prove another false start, or may we expect a more sincere effort this time? Reference is made to the...
A non-starter
14 Jun, 2024

A non-starter

WHILE the UN Security Council had earlier this week adopted a US-backed resolution calling for a ceasefire in Gaza...