Islamabad crushes people while neighbours shield citizens from the fallout of regional conflicts … writes Dr Sakariya Kareem
In the quest to discover new economic miracles, the Pakistan government has found a really interesting one. It has reduced the prices of fuel, petrol by PKR 1.65 and high-speed diesel (HSD) by PKR 0.88, per litre. The ‘generous’ reduction has come after increasing the prices of petrol by PKR 12.9 and HSD by PKR 3.72, per litre. Do you call it relief for the millions of poor people already crushed by soaring fuel and energy prices. It is pure mockery in the “pure” land of Pakistan.
Notably, Islamabad appeared to have hardly given thought to the impact of the inordinate increase in the prices of fuel despite the country suffering from double-digit inflation. A majority of the population is struggling to eat twice a day as the prices of essential commodities including wheat have skyrocketed. Diesel remains more than PKR 143 above its late-February level while petrol has spiralled up by PKR 123. Is the Shehbaz Sharif-led government really concerned about people’s suffering if not their welfare.
The striking point is that Pakistan is not the only country that has been hit by the disruption in crude oil supplies after the US attacked Iran. Pakistan’s neighbours managed to hold the prices of fuel, thus protecting their citizens from the sudden blow. However, the Islamabad government allowed the shock to reach consumers filling up with fuel at the pump. Leave aside India, Pakistan could not even do what Bangladesh, Nepal or Sri Lanka did to absorb the shock.
When international crude prices increased by almost 75 percent from USD 70 to USD 122 per barrel, the Indian government ensured that people were not hit hard. It restructured the tax structure and absorbed losses to protect people from an inflation bolt. This is what a prudent government is supposed to do. This is probably the clearest contrast with Pakistan. The Islamabad government continues to collect heavy taxes and duties on petroleum products, leaving its citizens to absorb the shock of higher global fuel prices. About a quarter of the fuel price goes to the Pakistan government as taxes and duties.
Even Bangladesh ensured that fuel prices did not hurt its people. It managed to keep prices unchanged for four months in a row, despite going through IMF-led reforms. It resorted to an automatic pricing mechanism, delayed sharp increases and secured multilateral financing. Bangladesh used external financing and fiscal measures to absorb a substantial part of the fuel shock, which Pakistan certainly failed to do. Islamabad continued to deny any room, calling it fiscally unsustainable.
Sri Lanka cushioned the shock, preventing the free pass of international oil movements through to consumers. Nepal and the Maldives ensured that fuel remained affordable despite a surge in the international petroleum prices. None of the South Asian countries are rich or fall into the developed nation category. Barring India, all face fund crunch. Yet they did their best to shield their citizens. So how fair and judicious it is for Islamabad to keep blaming the international situation when people are in misery, distress and hardship.
It is not merely a question of economics. But of credibility, humanitarian values, and good governance. Pointing at ‘international markets beyond its control’ will not help. Why did not the Pakistan government reduce taxes and duties on petroleum products? What is has done is pure fakery built on a simple fallacy that the PKR 0.88 reduction can be presented as relief. The reduction of PKR 0.88 against the increase of PKR 123 is pure mockery.
The government response to the fuel crisis has been increasingly become a mockery of relief in Pakistan. Families are paying more for food, transport, and other essential commodities. Technically, the government reduced the prices, but are they enough or even significant as compared to the huge hike over the past six months. Such announcements tantamount to political fakery. The PKR 0.88 cut does not look like relief to distressed people. It looks like a mockery of their hardship.
