Editorial
Fuel price rise to hit people hard
Find mechanism to mitigate fallout
We are shocked at the government's announcement of a sweeping increase in the price of all categories of fuel oil -- petrol, octane, diesel, kerosene and furnace oil. The government subsidy on petroleum products becoming 'unsustainable', this has to be cutback on, to save Tk 4,000 crore on that account.
Nobody, however, can brush aside the economic necessity of price adjustments pegged to import costs of fuel. But, there must be a method for striking a balance between cushioning the people against rising prices and efficient subsidisation of costs.
On quite a few counts, the government's approach can be critiqued. The first thing to note is the suddenness of the move apparently opted for keeping any adverse reaction at bay. The price increase has been effected through an administrative fiat, as always. Strictly, this is anachronistic to democratic norms. No consultative process including an analysis of its possible knock-on effects on the economy or exploring alternative sources to scrounge money from was taken recourse to.
It is significant to note that the price hike has been at a flat rate of Tk 5 per litre. This clearly does not take into account the relative affordability of different categories of users. Petrol and octane are used by the up-end consumers, diesel by truckers, transporters and farmers, furnace oil by industries and kerosene by the poor. What is featherweight of Tk 5 per litre on the rich is a heavy strain on the general consumers. Thus the incidence of the levy should have been spread thin on the vast majority of petroleum product users with a different rate of increase applied to them, if at all.
The across-the-board increase in the price of petroleum products, second time in two months is set to ratchet up costs of transportation and production in agriculture and industry. This also amounts to courting further inflation and higher costs of living. How the government is going to leverage the common people against the effects of inflation, would be well worth keeping a tab on.
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