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The Fuel Price Illusion

18 0
yesterday

The people were already worried about inflation when the government hiked oil prices for a second time, justifying the move by pointing to the U.S.-Iran war and its effects on global markets. However, when there was an immediate public reaction against the surge in fuel prices, it was decided to reduce the price by 80 rupees. Even if the price of 137.23 rupees is increased and then reduced by 80 rupees, there will be no significant relief for the public. Because once the price of petroleum increased, the cost of transporting goods across the country was immediately hiked by 60 percent. Obviously, this will lead to a flood of inflation in all necessities of life, including food and beverages, making it unimaginably difficult for the poor and middle classes to maintain a basic livelihood. The government's position is that after the record increase in global oil prices due to the war between the US, Israel, and Iran, it had no choice but to raise fuel prices to the same extent in Pakistan. Although these decisions will severely worsen the problems of the common man, the government appears indifferent, with decision-makers failing to consider the consequences. Anti-people decisions are being made, and once again elite interests are favoured at the expense of the public while running a “savings campaign”. All this is nothing but a political and advertising campaign. No government in this country has been able to introduce a fair tax system so far, so how can it claim to turn economic distress into stability, overcome the current crises, and provide relief to the people? In this country, the national treasury is filled by imposing a heavy burden on the common man through indirect taxes. The result is that, according to government documents, the poverty rate has reached its highest level in the last 11 years, at 29 percent.

On the one hand, poverty is rising in the country, while inflation is steadily increasing as a result of the government's anti-people policies. Amid the highest spike in petrol and diesel prices in the nation’s history, the government has hinted at several public concessions, but in principle, the best way to provide relief would have been to avoid further increasing revenue through petrol and diesel, as is being done in other countries. An example can be seen in the decision of the Spanish government, which has implemented a 21 percent value-added tax. In view of the ongoing global crisis, instead of placing the entire burden on the people, it reduced the VAT rate from 21 percent to 10 percent. Therefore, the government cut its revenue rather than burden its citizens. In contrast, the opposite is happening in Pakistan: the burden is being placed on the common man while government spending remains lavish and the elite continue to be rewarded. But remember, this could be the last straw that breaks the camel’s back.

At present, the prices of petrol and diesel in the country have reached their highest level in history, after which an inflationary storm is waiting to break out like a flood in mountainous areas. International organisations have warned of a significant increase in food prices, but the effects of the sharp rise in energy prices at the national level will not be limited to food alone. The rulers must realise how serious the consequences of this increase in petroleum prices will be across all walks of life and how difficult life will become for the common man, who is already grinding under the weight of inflation. The rulers do not seem particularly concerned, as a four-day workweek for government employees has been announced, but nothing has been devised for the private sector, where a major portion of the population is employed and contributes to the national economy. The authorities appear to believe the public will accept whatever burden is imposed without protest.

Instead of taking to the streets, the opposition has suggested holding an all-party meeting. People are unhappy with this weak response, and their patience is running out. Anti-government sentiment is growing among the general public, prompting discussions about subsidies. However, government officials and petrol pump owners are unclear about the mechanism of the subsidy being announced by federal ministers for certain sectors and classes. This mechanism is so complicated that, instead of providing benefits, it may cause further harm. The new subsidy model will neither offer meaningful relief nor reduce inflation. Meanwhile, the Prime Minister is again urging the elite to adopt austerity measures in the national interest, but no concrete steps have been announced to reduce the privileges of the ruling class. In such circumstances, the possibility of direct conflict and social unrest between an inflation-hit public and the privileged class cannot be ruled out, and may soon become visible across society.

Attiya MunawerThe writer is an activist and environmentalist. She covers human rights and politico-environmental issues. She tweets @AttiyaMunawer and can be reached at attiabutt121@gmail.com


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