::: Star Weekend Magazine :::

Economy

Fuelling the Existing Fire

Elita Karim

Mohammed Jamaluddin eats his daily lunch at a 'hotel' in Shewrapara. Working as a chauffeur nearby, he, along with other chauffeurs, taxi drivers and shopkeepers eat their daily meals at the hotel. Recently, the hotel has been losing customers because of the sudden rise in the price of its package meals. Prices of daily essentials including rice, lentils and edible oil shot up further in the capital in the last week. "A plate of rice is usually around Tk 5," says Mohammed Jamaluddin. "A basic meal would therefore come to around Tk 25-30, complete with daal, potatoes and a piece of chicken or vegetables. But now, the price has increased to Tk 50-60 a meal. An extra piece of chicken, fish or vegetables would increase a single meal to at least a Tk 100. It will be difficult to spend this much every day on a single meal, especially since this is happening in all the hotels nearby."

Like Jamaluddin, people belonging to low and fixed income groups have begun to get a taste of the hardship caused by the latest hike in fuel prices. Consequently, prices of almost all commodities including rice and edible oil shot up across the country following the government move of increasing fuel prices. The poor, already facing hardship in buying essentials at higher rates for last many months, the recent rise in fuel prices will put the poor in double trouble.

The increase in fuel prices leads to an increase in bus fares, making lives miserable

Very recently, the government's decision to increase the prices of octane and diesel to Tk 90 and Tk 55 a litre respectively left the general people astounded and practically helpless. In a country like ours, where fighting poverty is a Herculean task, research reports say that this 40 percent hike in the prices of diesel and kerosene will lead to more inflation and creation of four lakh new poor people in the country.

According to Wahiuddin Mahmud, an eminent economist, the government should have a very clear direction on its policy regarding the amount it can save from the petroleum sector by increasing the price. "Inflation directly affects the poor people," he said recently at the launching ceremony of the fourth issue of the Bangladesh Economic Outlook, a quarterly published by Shamunnay, a local thin tank.

After the food crisis, yet another major issue that the people are facing now is commuting. As soon as the fuel prices shot up, bus fares were not far behind. In 2006-07, government estimates say that around 36 lakh tonnes of petroleum products were used in Bangladesh, 65 percent of which was diesel. Sixty percent of the diesel was used for transport, 32 percent for agriculture, and the rest for other purposes.

Immediately after the increase in fuel prices, chaos broke out as operators of all modes of transport were in a frenzy increasing fares. The new rate of bus fare is Tk 1.05 a kilometre and Tk 1.08 for minibuses, according to the authorities. On Mawa and Paturia ferry terminal routes, bus fare was increased to Tk 1.08 a kilometre while for minibuses the fare was increased to Tk 1.11 per kilometre. In the capital, bus fare went up by Tk 1 to Tk 5 on different city routes while the increase was by Tk 50 to Tk 70 on inter-district routes.

There were heated debates and scuffles between passengers and transport crew. In fact, many were not aware of this sudden increase. "I have to go back to the place where I work in Rampura," says a teary-eyed Morjina Khatun. Both Morjina and her younger sister Husna Khatun work as housemaids in Rampura. After a long time, they were finally going on a weeklong holiday to their village home in Mymensingh. Since they were planning to return to Rampura after a week, they were carrying only a part of their monthly salaries each. As a result they did not have enough cash with them to pay the bus fares, not to mention purchasing the tickets back to Rampura as well.

Economists say that the price hike of petroleum products is an influence of the international market

Even though different socio-political organisations condemned the hike in fuel oil prices, saying that the increase will make life more difficult for the people, economists and experts say that the price hike of petroleum products is an influence of the international market. Rising fuel costs are contributing to higher food prices around the world. However, the developing countries mostly end up facing the brunt of such price hikes. In fact, according to a BBC report, millions of the poorest people in South Asia have been hit badly. In Pakistan, natural gas prices rose up to 31 percent, a day after petrol and diesel prices went up by 10 percent. The rise in the price of petrol was the fifth in four months. A litre of petrol now costs 75.69 Pakistani rupees ($1.11), compared to 53.70 in February. Diesel is now 49.05 a litre and a kilogram of compressed natural gas costs 52 rupees.

While Professor Mahmud suggests that the government should now lay emphasis on new employment generation to address the present situation, economist Dr Atiur Rahman, also the chairman of Shamunnay, calculates that the government could save Tk 7000 crore by reducing the subsidy from energy sector. According to him, the government needs to spend the savings on the estimated four lakh people who will have a hard time merely to survive, because of the increased price of fuel.

The sudden increase in fuel prices, leading to a further hike in prices of essentials all over the country, has not been accompanied by any increase, whatsoever, in the purchasing power of the general working people. The state of the unemployed has been left unchanged in Bangladesh and with food prices soaring to unprecedented heights, many Bangladeshis are faced with the bleak prospect of continuous hunger.