LAHORE, April 14: Former caretaker federal finance minister Dr Salman Shah says the new government will have to increase oil and wheat prices within a year to avoid a crash.

Speaking on ‘The State of Pakistan’s Economy’ at the South Asian Media Centre here on Monday, he said increase in wheat prices and surge in oil prices -- from $30 per barrel in 2004 to over $112 per barrel at present-had created a dangerous situation for the previous government and undone lot of good done by it during the past eight years.

The new government, he said, would have to raise the oil prices for bringing the same on a par with the international market to avoid fiscal deficit.

He said there was a huge gap in international ($500 a ton) and domestic prices ($300 a ton) of wheat. The price would still be far less than that of world price even after raising of support price to Rs625 per 40 kg, he added.

Low wheat prices were resulting in smuggling of flour to Afghanistan and Central Asia, he said.

He said cooking oil prices had also gone up in the country after increase in Malaysian palm oil rate.

He said the previous government had proposed grant of food subsidy of Rs1,000 to 7 million poor families through Utility Stores and bringing food prices on a par with the world’s. As many as 2.5 million families were already receiving financial assistance from the Baitul Mal, he added.