Pressure to raise fuel price again

Understandably, the latest price hike in September was inevitable, with the increase of crude oil price in the international market. However, there has not been a corresponding fall in fuel price in Bangladesh even though the international crude oil price has come down since then. We hope that the finance minister would resist any temptation to increase the price of these items even after there is, according to the finance minister, ' a downward trend in the price levels of essentials'. Price of commodities in our country always defies economic laws, and the theory of 'ratchet effect', is no more pronounced than in Bangladesh where prices go up, never to come down again. While one can understand the consequence of a lower price of petroleum in Bangladesh compared to the neighbouring countries, setting a high price for the commodity is not the way to stop its being smuggled out.

Over the last several years we saw manifold increase in the fuel price, which was raised as many as eight times, the ripple effect of which was felt on our economy. Another round of increase in cost of fuel would have the last straw on the camel's back. And yet a very large foreign exchange bill the government has to pay for importing crude oil, whose local market price dictates other commodity prices, which is as it should be.

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It being a subsidised commodity, the one way of balancing the high cost of subsidy would be to reduce import and excise duty that the Petroleum Corporation has to pay on this account.