The New Nation - Internet Edition

Ariful Huq

The caretaker government has increased the prices of fuels by 40 percent with effect from the first day of the new fiscal year. It is the second incident of fuel price hike by the present government. In April last year the prices of petroleum product was increased by 13 to 21 percent. The government re-fixed the price in the wake of price hike in the international market. With the adjustment of price of per litre octane will be Taka 90, petrol Tk 87, kerosene Tk 55, diesel Tk 55, furnace oil Tk 30 and the price of one cylinder LPG will be Tk 1000 which were Tk 67, 65, 40, 40, 20 and Tk 600 respectively.

Increase of prices of fossil fuel in a highly unstable market situation is feared to spell adverse impacts on the national economy as a whole and give rise to more volatility in price structure with inherent trends of price escalation of essential goods. It is deemed to add to the mounting sufferings of the poor and low-income groups of people. This likely development of the economy has brought a number of additional tasks before the government. Correct handling of these issues may ease the situation to some extent. This price hike of oil is actually a tough dilemma for the government: the unprecedented rise of crude oil price in the international market compelled the present caretaker government to increase prices, though they are believed to be fully conscious about the effects of this hike on the national economy. On the one hand the government had to incur loss of millions of hard earned foreign exchanges every year as part of subsidies for oil. On the other side, huge quantity of this much valuable item was being smuggled out of the country due to higher prices of the same in a neighbouring country. The government took the decision to bring down the losses and discourage smuggling. However, such a rise of oil price was implicit in budget computing. At the same time, the government is reportedly mulling over a 42 percent increase of gas and electricity tariffs.

The instant effect of this price adjustment has been observed in the transport sector. While the government increased bus fare by about 20 percent, the bus owners have rejected it and demanding almost double the previous rate. It has been a cause of sufferings for the passengers. Increased transport fare will increase carrying costs of goods leading to another spell of increase of prices of necessary items. The Finance Adviser himself is reported to have speculated a 30 percent hike in food price. Increased diesel and furnace oil price will increase production cost of agricultural and industrial goods.

This may lead to slackening food security for the common people especially the hard core poor and will make life tougher for them. Experts speculate serious volatility in the national economy, which may even lead to famine in the country. According to them, 40 percent hike of oil prices at a time is too high for the national economy to absorb.

To avert further aggravation of sufferings of the poor and deterioration of the situation, the government must activate agriculture, industry, trade and commerce at any cost at the earliest possible time. The government should also ensure a regular income for the poorer sections by ensuring employment at reasonable wages, must widen social safety net both in size and monetary allocation.

Opening of food window at low cost may mitigate sufferings of the poor. The government must monitor market situation aimed at desirable stability. The people and the government officials should be encouraged to maintain austerity in day to day life. Luxury at state cost must be stopped. The government must strive to gain confidence of the business community but must not surrender to any of the syndicates and act at the cost of national interests.