Bus fares, CNG price hiked
Analysts fear bad impact on consumer spending
Less than 24 hours into the hike in fuel prices, the government yesterday increased bus and auto-rickshaw fares, and the price of compressed natural gas.Bus and minibus passengers now have to pay an additional 5 paisa per kilometre while CNG-run auto-rickshaw passengers 14 paisa per km, according to the revised fares that came into effect midnight last.
The per km fare on buses is now Tk 1.60, which was Tk 1.55, while the fare on minibuses is Tk 1.50, upped from Tk 1.45.
The minimum fare on buses (Tk 7) and minibuses (Tk 5) remain unchanged.
Bus fare between Dhaka and its neighbouring districts like Narayanganj, Munshiganj, Gazipur, and Manikganj, was fixed at Tk 1.50 per km.
Diesel-run inter-district buses will also charge extra 5 paisa per kilometre at Tk 1.20.
The communications ministry reset the transport fares following a proposal of Bangladesh Road Transport Authority, ministry sources said.
This was the second transport fare hike in four months. On May 19, the government hiked the transport fares by 30 percent.
Yesterday, the government raised price of CNG by Tk 5 per unit, a day after Bangladesh Petroleum Corporation increased the prices of petroleum products by Tk 5 to Tk 8 to reduce subsidies on imported petroleum products.
The new price of CNG -- Tk 30 per cubic metre up from Tk 25 -- also came into effect from midnight last.
The Awami League-led alliance government increased the CNG price to Tk 25 per cubic metre from Tk 16.75 once before on May 13.
Shamim Ahmed, a resident of Dhaka's Sheorapara area and a regular bus passenger, termed the transport fare hike irrational and unacceptable. “Low-income city dwellers will feel the pinch,” Shamim, who works in an advertising firm, told The Daily Star.
Nurul Islam of Green Road said the government should not increase transport fares more than once a year. “The new transport fares came when transport workers and passengers are still fighting over the earlier hiked fares,” he said adding that this move will only intensify the tension.
Amjad Khan Chowdhury, president of the Metropolitan Chamber of Commerce and Industry, said the decision to hike prices of imported petroleum products and CNG, and the increase in bus fares will have a dampening effect on the economy.
“But, it was needed to reduce the huge subsidy on imported oil,” he said. The decision may hamper the economy to an extent but exports should not be troubled, he added.
Khondaker Golam Moazzem, senior research fellow of the Centre for Policy Dialogue, said price hike of petroleum products and other fuel was needed to reduce pressure on the macro-economy. The decision to hike prices of petroleum products and to increase bus fares will have a bad impact on consumer spending. The government should see how pressure on ordinary consumers can be reduced, he said.
If the prices of imported petroleum fuel and CNG were not increased, the government would have to manage the macro-economy by either printing bank notes, borrowing money from the banks, or by receiving foreign aid, he added.
Government earnings, apart from the contribution of the National Board of Revenue (NBR), are not good even though the inflow of remittance is maintaining a moderate growth, Moazzem said.
At the same time, the government is receiving the targeted foreign aid. It has a target of receiving $3.3 billion aid this fiscal year.
Government expenditure continues to increase mainly due to high subsidy on importing petroleum products. “So in this situation the government chose to increase prices of petroleum products for better macro-economic management,” he said.