Transport: Reduction in fares can help subdue inflation: Pasha

The rate of inflation may come down to 6 percent from the current 8.5 percent if transport fares come down fully to reflect the saving in fuel costs of over 30 percent after reduction in the petroleum prices by the government since end of March, said renowned economist and former finance minister Dr Hafiz A. Pasha.

According to him, a benefit of almost Rs200 billion is estimated at an annual basis to the people at large due to a reduction in the prices of petroleum products. However, he said, the benefit is conditional to passing of the benefit in the form of lower tariffs on the transporters.

He was commenting on the quality of the debate held in a recent session of the Parliament.

Talking to Business Recorder, he said the Parliament did not assess the effectiveness and impact of the relief packages of the government and the State Bank of Pakistan (SBP) for providing relief to businesses, families, daily-wage workers, medical and health workers and consumers after the spread of the coronavirus since the middle of March.

He wondered if the government had carried out any regulatory inspection relating to the current transport fares? He said the government should make it conditional on the transporters to fully transfer the savings in fuel costs to the commuters by reducing fares to the tune of at least 15 percent as a pre-condition for resumption of public transport.

He said one of the big moves under the Prime Minister's Relief Package was the reduction in the prices of petroleum products. The government has reduced the price of petrol by Rs15 per liter and the price of HSD by over Rs27 per liter. The smaller oil products have also enjoyed a similar fall in prices. A month earlier these prices had been brought down by Rs15 per liter.

He said despite the big decrease in prices, the government was in fact able to virtually double the petroleum levy to Rs30 per liter, for example, on HSD. He said the tax component in HSD was now over Rs46 per liter, which was more than half the price.

Because of this big increase in the petroleum levy, he said, the government would see a 40 percent increase this year in the petroleum levy revenues and almost 66 percent next year, equivalent to an additional revenue of almost 150 billion rupees. According to him, the government had rightly claimed that the price of petroleum products was much lower in Pakistan than in India or Bangladesh. However, there are other countries which are also oil-importing like us but have even lower prices. These countries include Malaysia, Egypt, Afghanistan and Vietnam, he added.