Sunday, 29 January, 2023

Control Artificial Price Hike

Control Artificial Price Hike

Narayan Upadhyay

The price rise has become one of the talking points in the country, where a considerable number of its population still grapple with poverty as many wage earners cannot earn even a dollar a day. Various components are at play to drive prices higher across the country. Our authorities, however, appear clueless to stop such elements from pushing up inflation. The latest hike in petroleum prices has caught everyone by surprise. Because whenever fossil fuels, including cooking gas, become dearer, they cause domino effects driving the prices of commodities and services higher. With every increment in petroleum prices, transportation costs go up, which encourages traders and merchants to up the prices of their goods.

In recent years, the nation's petroleum monopoly, Nepal Oil Corporation (NOC), has brought in an automated prices system, as per which the prices would rise or decline as per the fluctuations in the prices of petroleum in the global market. Also, the NOC that remains dependent on the Indian Oil Corporation for its imports of petroleum products has to often adjust domestic prices based on prices in India, which may push prices up in the Nepali market. However, media has accused NOC of making various pretensions for not decreasing prices even when prices go down in the international markets. 

Heavy losses
The oil monopoly often justifies its actions: owing to the government's demands and instruction, it cannot implement the automated pricing system leading to its huge losses. To recoup such losses, the NOC raises prices exorbitantly by hiking the cooking gas prices by Rs. 125 and prices of other products by Rs. 6 and aviation fuel by Rs.15 within just two weeks. It had suffered a loss worth Rs. 20.21 billion in four months. However, the oil monopoly drew ire for distributing unnecessary allowances and benefits to its employees, despite suffering losses. No government institution in the country provides extra benefits to its staff despite bearing heavy losses.
Petroleum prices have indeed put the purchasing power of a common citizen on the receiving end. Daily commodities, services and luxury item prices will see a rise, causing troubles to the middle, lower-middle and poor households. As all price rises, people with lower income feel more pinch, which only deepens the level of dissatisfaction among poor masses against the government and authorities. 

Various measures need to be put in place so that petroleum prices should not touch such a high to make inflation unbearable for the masses. Our government can take a cue from India for lowering the petroleum prices. The Indian government lowered excise and other taxes levied on petroleum. To stop prices from galloping and to ease the burden on its citizens, our government too should revise these taxes levied on petroleum.
In the meantime, one should remain aware that petroleum stocks are not the only source that extends inflation in the nation. There are diverse reasons, one being the expansion in customs duties and different taxes that government imposes on goods and services every year while presenting its national budget. Add to this the taxes and duties that local and provincial authorities place on goods and services. 

Tax collection is fundamental for the federal and provincial governments for continuing their development targets and for carrying out public welfare programmes. But taxes should be levied to an extent that keeps inflation at a legitimate level. They should not make the goods and services out of reach of the citizens, especially those grappling with low income. The government can soothe the pain by introducing policies and programmes aimed at the welfare of the people hit hard by the unreasonable price hikes.

Artificial inflation appears to be in ascendency here. Besides hoarding and cartels, middlemen are having their field day in manipulating the prices of necessary commodities. For example, the supply and price of vegetables in the Kathmandu Valley are manipulated by profit making agents who act as a conduit between wholesalers and farmers. 
They, along with wholesalers, are the ones who receive the sizeable chunk of profits while the farmers receive nominal values of their products and consumers pay through the nose. The same is true about the commodities a consumer has to buy for households. People blamed importers and brokers for inflating the prices of edible oil and grocery items in recent times. Every family has suffered while buying these must-have kitchen items. 

As goods and services that get dearer leave their indelible marks on our households, what is bothersome is our authority's abject failure to stop artificial price rises. It has not enacted strong measures to prevent hoarding, cartels and profiteering, among other ways that only impel prices. It has failed to stop middlemen and importers from making profits at the cost of common citizens. Market monitoring, conducted to keep the prices of goods and items at a permissible level, is quite ineffective. Officials taking part in market surveys or other acts to oversee prices are often charged with taking bribes, therefore rendering the entire process of managing inflation ineffective.

A welfare state has had a prime obligation to keep prices at a rational level by preventing all activities designed for making undesirable profits. The government must act as it has the major duty of providing succour to the people living in destitution. Besides mobilising all its apparatuses for development targets, a government must enact and enforce laws and regulations that help curb prices from multiplying. Any exorbitant rise in prices or sharp increase in inflation contributes to its failure in ending abject poverty from the nation.  

(Upadhyay is managing editor at this daily. Email: