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The Importance Of Fuel Subsidy

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Subsidy can be characterized as a money related support to certain product or classification of the industry so the price will be low, and ideally keep on giving occupations and turn off other monetary action. Subsidies have been around for a really long time and it comes in numerous structures, for example, money, labor, ranch, export, utilization, education, housing and so on. Fuel subsidy alludes to the exertion by the administration to pay at the contrast between the price of fuel at the pump and the real cost of the fuel. So by paying the distinction, the government empowers fuel to be sold at a lower value so it will help reduce the burden, its citizen particularly the lower pay incomes. Prior to a government started actuating another …show more content…

Fuel subsidy also reduces the transportation fares. After fuel subsidy is established the worker could keep their money in their own pocket without spending a lot of money on transportation fares. Subsidies also keep the food price at an affordable level. Food is an absolute need in everyone’s life. Most foods are transported from a farm to another place by vehicles such as lorries. So, by practicing fuel subsidy people should only spend less money on transportation and the food transported. Other than that, fuel subsidy protects farmer’s income. Most farmers would sell their harvest to city sites to have more income for people in the city are too busy to have their own vegetable farm and orchards. To do so, the farmers have to transport those vegetables and fruits to market and related places. By practicing fuel subsidy, the farmers do not have to spend much money on transportation. So, in a different aspect fuel subsidy also protects the farmers. Fuel subsidy on the other hand makes utilities such as water and electricity affordable. Water and electricity are considered as the main utilities in everyone’s life by now. During any emergency situation water is distributed to consumers using the pump that are driven by electricity and diesel power. This situation had once occurred in Ghana. Therefore, an increase in the price of fuel will cause the price of water and electricity also increase. Not all who drive are rich. Due to lack of any facilities, many people avoid to use public transport. So, they are to take loans and buy a car. So, driving now has become more of a convenience than a luxury. At last, not least fuel subsidy help business to remain competitive. The subsidy helps to maintain the production cost in check and contributes to making the manufacturing and service sectors competitive. Fuel subsidy causes the government’s debt to increase even more.

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