The Price Hike!
By the Editor

AT LAST, the inevitable has happened. Just after a few days of hefty increase in the price index of Oil, the Pakistan Railways has placed a heavier weight on the travelers by rising its’ inter-city fares.

If analyzed with a realistic approach, this is the first impact, as many more seem to be in the offing. Such a course is by all perceptions going to make the poor suffer a lot, explicitly vis-à-vis the purchase of the day-to-day items, essential to live-on. As said earlier, the Oil Companies Advisory Committee (OCAS) had decided to raise the prices of petroleum products significantly.

With a sudden surprise, the prices of Motor Spirit have been increased by Rs. 2.58 per litre; HOBC Rs. 2.86; Kerosene Oil Rs 1.50 and Light Diesel Oil by Rs 1.36 per litre. There has been an unprecedented increase in prices of oil in the international market during the last few months.

As per the prevalent system, the Government was obliged to pass on the load to the consumer but the prices of petroleum products were frozen on May-1, 2004, prima facie to provide relief to the people.

The Government is said to have borne an extra burden of Rs 33 billion on this account. As per Government’s claims the prices of petrol and diesel would have been 10 and 32.5 percent higher than the current prices, if the entire increase was to be passed on to the consumer.

An announcement by the OCAC said that it was in this perspective that the Government has decided to pass on, what it phrases as a ‘small fraction’ of the additional cost to the people.

Nonetheless, it is regrettable that the Government has resorted to hiking the prices of oil at a time when the prices in the international market have come down significantly and, simultaneously they were stabilizing around $ 33 a barrel. This is the price range that the domestic consumer is already paying for.

There was, therefore, no justification, whatsoever, for the increase that is surely going to push up prices of almost all other commodities and services, to the magnitude of a hill-top.

The inflation has already gone much beyond the official estimation and, eventually, it would have negative impact on industrial and agricultural growth as well.

As we look at it this decision seems to be short-sighted as it comes close to January-2005 deadline when Pakistan’s main export earning sector, such as textile industry would face tough competition subsequent to the abolition of quota system.

One fails to understand how we expect our cotton products to compete in the international market when the cost of inputs is going up, so swiftly?

We feel optimistic that the decisions of both the Pakistan Railways and the OCAC shall be reviewed by the government, instantly by reverting the price-index to its previous rather lowest possible level, so that the people, especially those who fall into the category of low-income or fixated wages groups, can have a breath with relief and convenience.●