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Hike in petrol price

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Government increased the prices of petroleum products by 1.7 to 3.9 percent, or from Rs1.5 to 4.5 per litter, for the month of June 2019. Prices of petroleum products increased by 1.7 to 3.9 percent or from Rs1.5 to 4.5 per litter. This showed that the government failed to meet tax collection targets. The government increased the prices of petroleum products from 1.7 to 3.9 percent, or from Rs1.5 to 4.5 per litter, for the month of June 2019. The ministry of finance also announced new prices for high-speed diesel increasing them by 3.6 percent from Rs122.32 per litre to Rs126.82, an increase of Rs4.5 per litre. The latest price hikes are anticipated to keep consumers away from all essential items as Eid-ul-Fitr approaches. Under the new price the price of petrol will be increased by 3.9 percent from Rs108.42 Rs112.68 per litre; kerosene by 1.7 percent to Rs98.46 per litre from Rs96.77; and light diesel oil by 1.9 percent to Rs88.62 per litre from Rs86.94 per litre. This is a huge economic crisis as the new government forecast growth of 4 percent for next fiscal year in advance of an austerity budget aimed at securing a $6 billion loan from the International Monetary Fund. The new growth forecast for the fiscal year to June 2020, was approved during a meeting of the National Economic Council that signed off on measures including a five-year economic plan. The IMF agreement reached last month still requires approval from the Fund’s board in Washington but it has already specified that Pakistan must take severe measures to reduce fiscal deficit forecasted to peak 7 percent of gross domestic product. The increase in petroleum prices demonstrates the disappointment of the government to reach tax collection objects under International monetary Fund conditions to increase revenue. In reality the expenditures of the government on the other hand are also increasing. Following the price hike of petroleum products, rates of power, transportation and other utilities are also going up, raising more inflation. It is generally seen from time to time the prices of oil in international market are declining but in Pakistan they are increasing. The government’s measures are making it harder for common people to survive. The government desperately required IMF programme, it had to eliminate fuel subsidies in one single action. The ex-depot sale prices of petrol and diesel, for example were Rs53 and Rs32 respectively when the elections of February 2008 took place; they rose to Rs86 and Rs56 by July as the newly elected government had no option but to pass the full influence of the global price to consumers at the pump.
Since a huge part of the state’s revenue comes from taxes on fuels, the government’s revenue collection was set to drop just as swiftly. As a result it adapted to increasing taxes on fuel as the price declines increased, passing on only a few benefit to the consumer and keeping the other large to maintain the fiscal equilibrium. The devaluation of the exchange rate had made a fuel price adjustment necessary, but those who came before also had their constraints.
President of Karachi Chamber of Commerce and Industry has discarded the acceleration in petroleum prices just in advance of forthcoming Eid-ul-Fitr which would not only enhance the hurdles for the public but would also generate a very hardship conditions for the business and industrial community due to high cost of doing business. There is concern over rupee depreciation, intolerable inflation and another high rise in petroleum prices. In contrast to the 13 other currencies of Asia, Pakistan rupee has stayed the worst- case performer. KCCI claimed that new appearing situation has to be effectively addressed and tackled very cautiously or else , these hurdles would horribly influence the industrial performance, accelerate unemployment and highly increase inflation, specifically for the middle and lower section of the society, besides making the poorer and poorer. The exporters would also bear the hurt due to rise in cost of imported raw materials, creating the economy into further deep disaster. Pakistan’s imports stay inelastic and a feeble rupee would also not help and make Pakistani exporters to a less extent competitive. It should be well known that stricter monetary policy position never gave good results therefore, it is now that the central bank must slacken its viewpoint in order to give comfort to the businessmen and industrialists.IMF forecast at 2.9 percent which the international lender anticipates to decline to 2.8 percent in fiscal year 2020. All these poor forecasts by these international organizations gives a bleak image for possible investors as they get frighten away which was truly distressing. A positive lessening in discount rate would bring down the cost of doing business; encourage new investment and increase expansion and industrialization, furthermore generating job opportunities and strengthening exports of the country. Transporters have increased fares, disturbing the passengers leaving for their hometowns to celebrate Eid-ul-Fitr with their relatives and friends. The increase in oil prices has been made at a time when Eid-ul-Fitr is nearing. This has provided a chance to transporters to swindle the public without getting punishment from the authority concerned.