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EditorialPOL price hike conundrum

POL price hike conundrum

An unexpected increase in the prices of petrol, oil and lubricants (POL) from August 16 has sent a shockwave among the masses mainly because speculations were high that there would be some relief in the POL rates. The increase not only bewildered the masses but also dissent has been shown by the top leadership of the PML-N as well as party allies are not happy with the development.

The increase in POL prices, which directly makes an impact on the inflation rate, is a simple recipe for the political demise of the ruling party. The general public has already become fed up with the PML-N’s policies and its inability to check the growing inflation rate in the country. The latest move has created more trouble for the coalition government. PML-N supremo Nawaz Sharif has conveyed his anger over the decision while Maryam Nawaz has also opposed the decision and stated that she was standing with the masses.

Arguably, Finance Minister Miftah Ismail’s defence of the increase is beyond comprehension. Despite the fact that he has explained the mechanics behind the increase, the common man cannot digest a persistent increase in the prices of petroleum products. The reason is simple because the increasing petrol prices immediately cause high inflation on food items besides other items affecting the below poverty line population (over 50%). It would have been better for the government to subsidize the commodity and offshoot its burden by linking it to other tax recoveries.

It is also being argued that ground is being paved for the return of former premier Nawaz Sharif and former finance minister Ishaq Dar. Amid Miftah’s failure in controlling the ever-increasing price hike and the Shehbaz government’s inability to provide any relief to the masses, both PML-N leaders, who are on self-exile in London, can be presented as the real saviours of the nation in this murky situation. The statement of Maryam Nawaz about the anger shown by Nawaz Sharif strengthens the idea that Mr. Sharif is coming back.

Another concern, which has been raised by allies of the PML-N including the PPP and MQM-P is that they have not been taken on board before taking the decision of price increase. It is the domain of parliament to discuss those matters that have national importance and POL prices have taken the proportion of a national issue, therefore, the PML-N should have consulted its allies before imposing the price hike penalty on the masses. But the government has done it through an administrative decision while ignoring the necessary parliamentary process. In this way, the PML-N has made Miftah Ismail as a scapegoat.

Already, the rate of GST and excise duty in Pakistan is the highest in the region. There is no logical justification for such an increase. Possibly, the government is perturbed to meet the ambitious revenue targets, which have been set on the instructions of the International Monetary Fund. Amid declining foreign exchange reserves, the sale of POL is a cash cow for the Ministry of Finance as 25 percent of revenue comes from the oil and gas sector. The government supports an exorbitant increase in GST in order to keep the budget on track. This is not a strong argument because an increase in demand has already offset this shortfall and there is no reason to withhold the complete benefit of a fall in oil prices in the international market.

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