New Delhi, April 6 (IANS) The reduction of Rs 80 per litre in petrol prices in Pakistan is nothing but a “populist move” by a government struggling to balance emerging economic constraints and domestic political compulsions, a new report has said.
New Delhi, April 6 (IANS) The reduction of Rs 80 per litre in petrol prices in Pakistan is nothing but a “populist move” by a government struggling to balance emerging economic constraints and domestic political compulsions, a new report has said.
According to a report in Dawn, the initial fuel price hike — 43 per cent for petrol and 55 per cent for diesel — was “undeniably inflationary”, feeding directly into transport costs, food prices and broader inflation expectations.
Now, “the prime minister’s decision to reduce petrol prices reflects a deeper policy failure,” the report argues.
The decision underscores a tendency to respond to political pressure instead of governing by principle, it adds.
“Such reactive policymaking will neither protect people from the next wave of inflation nor contribute to building a stable and predictable economic framework,” the report further lamented.
According to Dawn, the move shows the government’s reliance on across-the-board relief regardless of income level rather than targeted intervention.
“In a country with limited fiscal space, such blanket measures risk misallocation of scarce resources,” it adds.
The fact is that failure to fully pass on the surge in global energy prices triggered by the US-Israel war on Iran to consumers has already cost the exchequer Rs 129 billion, with the meagre development budget absorbing a hit of around Rs 100 billion.
Thus, the fiscal gap created by subsidising petrol will not disappear; it will merely shift and low- and middle-income households will end up paying the price, whether through higher taxes and levies, reduced public spending, or inflation.
The abrupt fuel price revision has pointed to political pressure and a degree of confusion within official circles over how to manage the crisis. Analysts said the latest move highlights Pakistan’s limited capacity to cushion fuel price shocks.ank
–IANS
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