The latest hike of fuel-oil prices would further fuel the on-going upward inflation in the country’s economy pushing the fixed and lower to middle income groups into misery.
Economists expressed fear that the series of price hikes of fuel-oil would have a long-term adverse effect on industrial production, employment and living standard of a large section of people.
Centre for Policy Dialogue (CPD) executive director Mustafizur Rahman told New Age, ‘The decision of raising fuel price came at a time when there has been a high inflation in the economy. The latest hike in fuel oil price will further increase the inflation. People with fixed income will particularly bear the burnt.’
Rights activist Anu Mohammad, a professor of economics at Jahangirnagar University, said that a large section of the population would substantially lose their purchasing power which will force them to compromise their living standard.
He assessed around 95 per cent people would be affected due to the series of fuel price hike by Tk 10 a litter in two slabs in less than two months.
Anu feared that a number of small and medium industries might be laid off as a result of losing their competitiveness due to abrupt increase in production cost due to hike in fuel price.
According to the latest data of Bangladesh Bureau of Statistics, food inflation, which was at 12.7 per cent in August, had increased to 13.75 per cent in September while food inflation in urban areas increased to 14.69 per cent in September from 12.94 per cent in August.
The government planed to increase fuel-oil price to match with the international market to offset huge subsidy in energy sector, particularly caused by huge demand of fuel-oil to operate the recently installed rental power plants.
With the latest increase, the government so far has increased the price of fuel-oil including the most essential fuels for transport, lighting and cooking, diesel and kerosene by Tk 12 per litter in three slabs since May this year.
It has increased furnace oil price by 112 per cent or Tk 29 a litre, from Tk 26 to Tk 55 a litter in five slabs this year.
Anu said the government’s policy for power generation caused a huge burden of subsidy.
Mustafiz said that the burden of subsidy caused by fuel-oil fired rental power plants pushed the country’s economy to a vulnerable situation.
He said the government would have to borrow more and more from the central bank to meet the subsidy which in turn would increase inflation. And government’s excess borrowing from private banks would create liquidity crisis for the entrepreneurs which in turn would leave a negative impact on the country’s economy.
He added that the government should take necessary steps to control the price of commodities caused by the increase of fuel prices because a major part of businessmen usually manipulate such occasions to maximise profits.
The two economists feared that the country’s economy would not be able to contain the huge volume of subsidy and fuel price hike for a long time.
Mustafiz suggested the government should immediately go for replacing expensive fuel-fired power plants by low cost gas and coal-fired power plants.
He also urged the government to expand the coverage of rationing and safety net programmes to protect widening number of vulnerable people of the society.
Source: New Age
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