KARACHI: Chairman of the National Business Group Pakistan and president of the Pakistan Businessmen and Intellectuals Forum Mian Zahid Hussain has said that increase in the price of petrol fuels inflation but diesel price hike is more damaging for the economy; therefore, cross-subsidy can help keep inflation in check.
According to the Oil and Gas Regulatory Authority, at present petrol is being subsidised at a rate of Rs 21.3 per litre and diesel at Rs 51.2 per litre.
Mian Zahid pointed out that Pakistan’s is the weakest economy in the region, but the price of petroleum products here is less than in other countries, which is amazing.
In the case of oil, a subsidy of about Rs 2 billion is being given daily, out of which more than half is benefiting those who do not need the concession, he said. The government should make oil cheaper for motorcycles and three-wheelers while fuel for cars should be expensive.
He said the government can consider cross-subsidies in fuel to keep inflation a tad lower.
He was of the view that after the bankruptcy of Sri Lanka, Pakistan has become one of the most challenged economies in the region. How can a country that cannot function without debts keep the price of oil lower than the countries of the region with stable economies, he wondered.
Mian Zahid noted that those who sacrificed national interests for petty political gains aggravated the problem through subsidies and amnesty schemes and stopped the International Monetary Fund (IMF) programme, which is now being revived to save the country from a debt crisis.
He said the present government is facing a host of problems and has only a short period to solve them, but Prime Minister Shehbaz Sharif and Finance Minister Miftah Ismail have focused on the revival of the devastated economy and their efforts would yield better results soon.
Prime Minister Sharif’s good strategy and better governance have already reduced power load-shedding significantly and inflation has also started declining.
He said that through subsidy the increase in diesel price could be avoided as the fuel is used in areas such as transportation, power production, industrial production and agriculture, whereas a large quantity of petrol is used for fuelling motorcycles, rickshaws and cars.
Copyright Business Recorder, 2022