Price cuts by Rs10 to Rs14 per litre on petroleum are good news as well as representative of a balanced fiscal approach being adopted by the government to shield the citizens from bearing a direct impact of economic constraints. The new petroleum prices reflect a fall in the international market. 4.6-6.4% decrease for the next fortnight in comparison to the previous rates is a big relief for consumers who have shared the burden of inflation in earlier months. A successive decrease in recent months has brought the much-needed change that Pakistanis have been hoping for some time.
Not just a decrease in international prices but the valuation of the rupee in relation to the dollar has also contributed to the new prices in the domestic market. The government’s decision to pass on these benefits to the public underscores a commitment to mitigating economic challenges and ensuring a reasonable cost of living. In regards to fulfilling the requirements set by the International Monetary Fund (IMF), the general perception was that the government would fill the deficits through sky-rocketing prices that included tax rates higher than usual.
But what we see is a more balanced approach where if not every fortnight, the prices are reviewed and reset regularly. This gives the policymakers a good chance to periodically see how, when, and to what extent, price relief can be given. Though an overall challenging time for the country economically, the fortnight revision of petroleum prices has turned out to be a strategic approach where in accordance with exchange rate fluctuations and the international market, the gains are translated into price cuts of petroleum products.
Additionally, the government’s adherence to the maximum permissible limit of Rs60 per litre for petroleum levy demonstrates a responsible fiscal approach. However, it is equally important to maintain this threshold and not let the levy cross this rate. As the rupee valuation gets even better, the government must consider decreasing the levy. Domestic consumers deserve the most to benefit from these policies.