The New Nation - Internet Edition

A SPECIAL committee formed to consider issues of subsidy and related matters recommended readjustment or increases in the domestic prices of fuel oil in phases. The people witnessed the phase of implementation of such recommendations recently as prices of fuel oil was increased. But the upward readjustment of fuel oil prices can compound problems for the economy giving rise to more problems than what would be sought through reduction of subsidies.

In some cases, subsidies are a far better evil than straightforward measures to cut them down. The projected liabilities to be borne on account of keeping unchanged the rate of fuel oil subsidy in the current year's budget would not be more than 5.6 per cent of the GDP, according to an estimate. Not paying this amount of subsidy can invite on the economy a far greater havoc than what gains are expected from cutting subsidies. While maintaining subsidies, all out efforts should be made to reduce the import of fuel oils.

A good short-term measure would be rapidly helping the switchover to CNG from fuel oil by the country's transportation sector. The CNG conversion enterprises in the private sector can be made more interested to do their work with greater enthusiasm if the government reduces the various taxes on them. Such fiscal incentives will enable the conversion companies to carry out their works at reduced costs. This, in turn, would encourage speedy conversion of transports to CNG.

The development and use of non-conventional sources of energy, such as solar power, must be stepped up with a sense of urgency. The use of coal and natural gas should be similarly promoted fast. Gas exploration and production activities should be accelerated to increase the availability of gas. These measures would help cut dependence on imported fuel oil.