With due respect, this defies basic economics because prices of petrol have increased significantly in world market.
ASHBURN, VA, US: I write with reference to the government’s decision to reverse its earlier decision to increase the price of petrol. With due respect, this defies basic economics because prices of petrol have increased significantly in the world market.
Those who are saying that inflationary pressure will be reduced are wrong because a subsidy as massive as the one that the government will be forced to give now will cause a widening of the budget deficit and lead to excessive borrowing, which in turn is inflationary. And who is going to finance the gap in the deficit?
Saima Khan
Published in The Express Tribune, January 8th, 2011.
