If anybody in the government thought that people would rejoice at the news that PM Imran Khan allowed only a Rs5.40 per litre increase in the price of petrol, even though Ogra recommended a hike of Rs11.4 per litre, they were just wrong. Because everybody knows that this is just the tip of the iceberg and more such sudden increases will be spread over at least the first half of the ongoing fiscal year simply because of all taxes and duties that the government struck off from the budget, in blatant defiance of IMF’s contractionary mantra, the petroleum levy was still left in it. And to achieve the target of Rs610 billion under this head, petrol prices would have to be raised by something like Rs30-34 per litre over the course of the year. Everybody also knows that any rise in petrol prices promptly causes a second-round price rise across the board. Therefore something like this is not just a headache for consumers, it also dilutes the intended effect of a number of tax breaks – for which the finance ministry risked picking a fight with the IMF – simply because it fuels inflation in all sectors. Now there’s no telling how cost-of-production estimates will be disturbed, which will affect everything from production to exports, and therefore also revenue. Let’s not forget that projected imports for the new fiscal stand around $50 billion, so the deficit might also become a bigger problem than the ruling party is willing to admit right now. Now all eyes are going to turn to the State Bank of Pakistan (SBP). That is because with inflation already on the high side, especially considering that employment and wage cuts from the first round of the pandemic haven’t yet been reversed, the sword of an increase in the interest rate now hangs over the private sector. Should that really happen, the rupee might draw some strength from frenzied carry traders taking advantage of it in the international forex market, but the domestic industry will be priced right out of the market. And with petrol certain to rise, not just because Brent crude is jumping in the international market but also because of the levy, both consumers and producers can do little except brace for impact and give voice to their outrage whenever they can. *