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Economy

Shikha Jha -- Fuel subsidy cuts need not come at the poor's expense

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An employee at a Total fuel station fills up a motorcycle in south Jakarta.   © Reuters

Many Asian governments have subsidized coal, oil and gas as well as electricity for decades with the goal of making energy more affordable to the public and to domestic industry.

Oil has traditionally absorbed the largest share of subsidies. A few years ago, when crude oil shot past $100 per barrel, developing Asia accounted for as much as a third of total global subsidies for fuel consumption, most of which was spent on petroleum products. At about 2.5% of gross domestic product, these expenses held back governments from spending on other development priorities such as education, health and infrastructure. But do such subsidies at least reach the poor?

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