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Bangladesh is not Sri Lanka yet, but price hikes, protests are worrisome

The recent wave of agitations over an unprecedented fuel price hike in Bangladesh is raising concerns in Delhi, adding to worries over a troubled neighbourhood after unprecedented economic crises hit Sri Lanka and Pakistan. The India-friendly Awami League government on August 5 suddenly raised the prices of diesel and kerosene by 42.5% and petrol and octane by 51.1% and 51.7%, respectively. The fuel price increase led to a hike in public transport fares with an immediate cascading effect on food prices and those of other essential commodities.

Dhaka’s Daily Star described the energy price hike as “the highest ever in Bangladesh history”. Coming as it does after huge power cuts to conserve costly fuel and handle a sharp drop in domestic natural gas output, which is adversely impacting on industrial production especially in the export-driven readymade garments sector, the fuel price hike is causing much public angst.

LOAN CONDITIONALITIES
Many feel the huge fuel price hike follows conditionalities possibly imposed by the IMF, from which Dhaka now admits to seeking a $4.5 billion support package. It is also seeking similar support from the World Bank and Asian Development Bank (ADB) to the tune of another $1.5 billion. Bangladesh Finance Minister AHM Mostafa Kamal initially denied seeking bailout packages from multilateral lenders but now says they come without any conditions. He insists the fuel price hike was necessary to stop bleeding losses of nearly $8 billion due to fuel subsidies in the last few months, since the Ukraine war led to a huge spurt in global energy prices. Bangladesh may not yet be in the same boat as Sri Lanka or Pakistan as it still has enough forex reserves to pay for four to five months of imports, but rising fuel import costs and possible drop in export earnings due to power rationing and global recession may have prompted Dhaka to seek a safe cushion before it is too late. Regardless of why the government had to impose the drastic fuel price hike and seek support packages from IMF, World Bank or ADB within a month of high voltage publicity of having successfully built the 6.15 km railroad bridge on River Padma without World Bank funding and with the country’s own resources, there is no doubt that these developments are raising uncomfortable questions over Bangladesh’s much-touted turnaround success story and exposing chinks in its armour.

WHY INDIA SHOULD BE WORRIED
India has much cause for worry over the sudden turn of events in Bangladesh. In the first place, the wave of public agitation over an unpopular government decision is attracting many including apparently unaffiliated student and labour groups to join street agitations. Even transport operators are threatening shutdowns unless they are allowed to raise fares to manage high fuel prices impacting their cost of operations. This gives the Islamist opposition a huge opportunity to step up their agitation to bring down the Hasina government.

The leading Opposition party, the BNP, and its ally proPakistan Jamaat-e-Islami are clearly buoyed by this Godsend of an opportunity. No longer are they seeking parliament polls, due at end of 2023, under a caretaker government, as was the case a month ago. BNP leaders are now threatening a massive agitation to bring down the Hasina government. Any threat of forcible regime change in Dhaka should worry Delhi.

SOURCE: THE FEDERAL

SUBIR BHAUMIK  The writer is a former BBC correspondent and author

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