AajMirror editorial.
Petrol at nearly Rs394 a litre is a heavy burden for a rickshaw driver, a delivery rider or a family that depends on a single motorcycle. The pressure on any government to cut prices across the board is enormous. It should be resisted, and the relief should be redirected rather than abandoned.
The case against blanket subsidies
A subsidy on every litre helps most those who buy the most litres: owners of large cars and generators, not daily-wage earners. It drains money the government does not have, at a time when Pakistan has agreed with the IMF to run a primary surplus of 2% of GDP. It encourages more consumption of an imported fuel whose price is set by a war we cannot control. And once granted, blanket subsidies are politically painful to remove.
The IMF’s latest staff-level agreement asks Pakistan to phase out its fuel support scheme promptly, with any future support “limited, time-bound and targeted” through existing social assistance programmes. See our report on the agreement. That is sound advice, not just a lender’s condition.
A better way
Use the systems we have
The Benazir Income Support Programme reaches millions of low-income households through a data-driven registry. A temporary top-up linked to fuel prices would reach the people hurting most, at a fraction of the cost of a universal subsidy.
Help those who drive for a living
Provinces could offer time-limited support to registered rickshaw, taxi and goods-transport operators, whose costs pass directly into fares and food prices.
Invest in alternatives
Every rupee spent on bus rapid transit, electric buses and rooftop solar reduces future exposure to oil shocks. Subsidising fuel does the opposite.
Be honest with the public
The government should explain plainly what makes up the price of a litre: crude, import premiums, freight, the exchange rate and taxes, and publish how the petroleum levy is spent. People accept hard decisions more readily when they understand them and see them applied fairly.
The oil shock is not of Pakistan’s making. How we respond to it is. More in our editorials.
Sources are linked throughout this article. AajMirror verifies figures against the original reports; if you spot an error, see our corrections policy.