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Fuel subsidies benefit people having cars and motorcycles: OECD

Last Updated: Wednesday, January 30, 2013 - 16:06

New Delhi: Fuel subsidies are not really helping achieve the desired purpose and are mostly benefiting people having cars and motorcycles, a top official of Paris-based think tank OECD said on Wednesday.

"Fossil fuel subsidies affect people who have cars, people who have motorcycles... So, in equity terms, fuel subsidies are not really doing what they are purported to be doing," OECD Deputy Secretary General Richard Boucher said.

He was talking about fuel subsidies in the context of inclusive economic growth.

India and many other countries provide subsidies on fossil fuels like diesel and kerosene.

The Organisation for Economic Cooperation and Development (OECD) is a grouping of mostly rich nations.

Boucher was participating in a round table on 'New Approaches to Economic Challenges' organised by public policy think tank Observer Research Foundation.

Last week World Bank Chief Jim Yong Kim had said that countries should do away with subsidies for fossil fuels to help mitigate the impact of climate change.

"We should be removing fossil fuel subsidies in every country in the world," the World Bank President had said.

He said for instance Tunisia was finding it difficult to limit fossil fuel subsidies.

"The other issue is that we have fossil fuel subsidies. I was just in Tunisia and they are struggling to find a way to limit fossil fuel subsidies. (They said) that fossil fuel subsidies help richer people who drive cars.

"(fossil fuel subsidies) are fundamentally not progressive. We want to protect the poor and the fossil fuel subsidies don't do that... But it is politically very difficult," Kim had said.

Meanwhile, Boucher said that when it comes to inequality, governments need to look at ways that go beyond public spending.

In a response to a query on the government's direct cash transfer initiative, he said it is the "right step".

"Cash transfer is the right idea... In going from generalised subsidies to targeted ones," he added.

However, he emphasised that such a system should be carefully designed to ensure that money reaches the right hands and is spend on the family.


First Published: Wednesday, January 30, 2013 - 16:01
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