Petrol subsidy cuts: Taming a tricky beast

Iona Main, the author of this article mention that by 2013, SMERU declaring ‘exclusion error’– the exclusion of legitimately poor households from recipient lists – to be too high. While feedback on the 2015 distribution of compensation payments is not yet clear, outcomes for households which were granted compensation in 2013 are likely to be a good indicator of what we can expect. Research by SMERU indicates that the poverty rate for households that received the BLSM payment actually decreased slightly after the subsidy cut, illustrating that the payment was effective in reducing the short-term impact on poor households. On the other hand, non-recipient households that live below the poverty line (namely those who were victims of ‘exclusion error’) suffered deeply.


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