- For the government of our country to subsidize either electricity, PMS or any other thing for her citizens, it therefore means that they have acknowledged that the minimum wage and purchasing power of her citizens is so poor to meet the standard of living.
- It is so dangerous to remove subsidy when the Citizens of the country have seen it as a normal way of life and not a privilege. Nigeria has been under subsidy for so many years and every government takes up the responsibility. That is why it had occurred to many of their citizens that it is their right. So the absence of the so-called subsidy has now activated suffering on the Citizens.
Topic: The gloomy light called subsidy. - page 2. (Read 691 times)
Subsidy is a very broad topic in economics and in politics and it is because so many people do not understand the idea behind subsidy, that is why they complain and implement it wrongly.
The quick solution is the subsidy itself, long term solutions which could drive down the price of goods would at the earliest take a few years to show any results, however since politicians hold office for a very short amount of time they tend to not care about solving those issues with long term solutions, as someone else will get to claim they solved that issue when it was them the ones that solved it, so citizens are trapped in the middle and as soon as the subsidy ends the price of goods skyrocket, especially when we are talking about fuel as everything requires fuel to be made or to be transported, increasing the costs of almost everything at the same time.
Yes, it is true, this is the main problem, especially for governments in developing countries. They offer quick solutions to get rid of a problem, but in reality they create dozens of other problems in the long term instead.They care about getting rid of the current problem but they don't think about what might happen next in the long term.
Good point and yes it works like that for a lot of countries. Moreover, there are instances wherein big problems are being covered up by another problem and then the cycle continues. Then soon enough these problems are push at the back of everyone's mind and they just forget about it. In the case of subsidy, the government (not saying all, but definitely a handful of them) uses it to cover up some lingering issues and problems. It's like a cover up.
The quick solution is the subsidy itself, long term solutions which could drive down the price of goods would at the earliest take a few years to show any results, however since politicians hold office for a very short amount of time they tend to not care about solving those issues with long term solutions, as someone else will get to claim they solved that issue when it was them the ones that solved it, so citizens are trapped in the middle and as soon as the subsidy ends the price of goods skyrocket, especially when we are talking about fuel as everything requires fuel to be made or to be transported, increasing the costs of almost everything at the same time.
Yes, it is true, this is the main problem, especially for governments in developing countries. They offer quick solutions to get rid of a problem, but in reality they create dozens of other problems in the long term instead.They care about getting rid of the current problem but they don't think about what might happen next in the long term.
If the government decides to cancel subsidies on some basic materials, it must find quick solutions to cover the differences resulting from the rise in prices. Canceling subsidies without finding ways to compensate those affected by the cancellation of subsidies will cause many economic problems because this will create a state of stagnation in the markets as a result of high prices and the lack of purchasing power for most people.
Here in my country, for example, the government canceled subsidies on basic materials such as gasoline, diesel, gas, and some other basic materials, which caused a significant rise in prices and the inability of citizens to buy many goods due to the lack of salary increases, which created a gap in purchasing power, and recession began to hit Economy.
The quick solution is the subsidy itself, long term solutions which could drive down the price of goods would at the earliest take a few years to show any results, however since politicians hold office for a very short amount of time they tend to not care about solving those issues with long term solutions, as someone else will get to claim they solved that issue when it was them the ones that solved it, so citizens are trapped in the middle and as soon as the subsidy ends the price of goods skyrocket, especially when we are talking about fuel as everything requires fuel to be made or to be transported, increasing the costs of almost everything at the same time.Here in my country, for example, the government canceled subsidies on basic materials such as gasoline, diesel, gas, and some other basic materials, which caused a significant rise in prices and the inability of citizens to buy many goods due to the lack of salary increases, which created a gap in purchasing power, and recession began to hit Economy.
Subsidy on PMS alone won't help but eat deeply into the annual budget of any country. If removed would help the government to expand to other sector, which is lacking attention. A supposed country where people get fuel and probably cheap transportation and yet complain of hardship, shows the result that the country is only pumping money into one sector, the oil industry. Scholarship will fail to thrive in such country, unemployment, underemployment, poor wages etc will become a major problem in the country, while they enjoy cheap fuel. Maintaining the fuel subsidy suffers the country's economy, as the government spend huge amount of money daily. Instead of cheap fuel helping the citizens, they go ahead abusing it; pump attendants defrauding people. Fine everyone wants in cheap, but not when the government is paying for it. The money can be channeled to other sectors, such that everyone in the country can at least benefit from the annual national budget. Looking closely into the complaints after the fuel subsidy removal, it's not far from what we hear in the past when fuel was subsidized. Hence, the citizens should adapt to the current situation, and observe if the government is helping the country by removing subsidy.
If the government decides to cancel subsidies on some basic materials, it must find quick solutions to cover the differences resulting from the rise in prices. Canceling subsidies without finding ways to compensate those affected by the cancellation of subsidies will cause many economic problems because this will create a state of stagnation in the markets as a result of high prices and the lack of purchasing power for most people.
Here in my country, for example, the government canceled subsidies on basic materials such as gasoline, diesel, gas, and some other basic materials, which caused a significant rise in prices and the inability of citizens to buy many goods due to the lack of salary increases, which created a gap in purchasing power, and recession began to hit Economy.
The quick solution is the subsidy itself, long term solutions which could drive down the price of goods would at the earliest take a few years to show any results, however since politicians hold office for a very short amount of time they tend to not care about solving those issues with long term solutions, as someone else will get to claim they solved that issue when it was them the ones that solved it, so citizens are trapped in the middle and as soon as the subsidy ends the price of goods skyrocket, especially when we are talking about fuel as everything requires fuel to be made or to be transported, increasing the costs of almost everything at the same time. Here in my country, for example, the government canceled subsidies on basic materials such as gasoline, diesel, gas, and some other basic materials, which caused a significant rise in prices and the inability of citizens to buy many goods due to the lack of salary increases, which created a gap in purchasing power, and recession began to hit Economy.
If the government decides to cancel subsidies on some basic materials, it must find quick solutions to cover the differences resulting from the rise in prices. Canceling subsidies without finding ways to compensate those affected by the cancellation of subsidies will cause many economic problems because this will create a state of stagnation in the markets as a result of high prices and the lack of purchasing power for most people.
Here in my country, for example, the government canceled subsidies on basic materials such as gasoline, diesel, gas, and some other basic materials, which caused a significant rise in prices and the inability of citizens to buy many goods due to the lack of salary increases, which created a gap in purchasing power, and recession began to hit Economy.
Here in my country, for example, the government canceled subsidies on basic materials such as gasoline, diesel, gas, and some other basic materials, which caused a significant rise in prices and the inability of citizens to buy many goods due to the lack of salary increases, which created a gap in purchasing power, and recession began to hit Economy.
All subsidies eventually gets removed, when it does, citizens just pay normal price. Basic needs can't be escaped whether there subsidy or not.
I don't know how people will view it, but I'm not too familiar with the form that appears in the periods of each country's regimes, but I have seen and heard the stories of the previous generation about the period of life during the subsidy period, it can be said that a difficult period when many problems arise, what many people imagine about a mutual support in real life is rare yes, instead the corruption of disequilibrium still lurks in all its different shades, there are periods where even now I still witness some lingering prejudices about fairness to the extent of theoretical calculation (it's not fair in practice).
The reform period appeared, the economy opened up, and people were more free to develop than through the government control apparatus, I think the problem is whether the object of application here is really suitable for The current context or not, when different countries have different problems in the social system, so the adaptation in the operation of the economy is something that I clearly see for a progress.
The reform period appeared, the economy opened up, and people were more free to develop than through the government control apparatus, I think the problem is whether the object of application here is really suitable for The current context or not, when different countries have different problems in the social system, so the adaptation in the operation of the economy is something that I clearly see for a progress.
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You are lucky that you have a government that subsides your petrol. But then again it's a privilege that can be taken anytime and so that's what they do? For me? I will strive hard as I know I don't have the petrol subsidy already.
Or maybe you can tighten your belt, save money or get other means of transportation so that you won't used your car like everyday. It's could have a pros/cons of the removal, but I guess your government is trying to save money as well and uses to other projects or top up other subsidies that is very important to the population.
When you say that you guess the government is trying to save money, you are not far from the truth cus that is actually the reason for the subsidy removal in the first place.Or maybe you can tighten your belt, save money or get other means of transportation so that you won't used your car like everyday. It's could have a pros/cons of the removal, but I guess your government is trying to save money as well and uses to other projects or top up other subsidies that is very important to the population.
I live in the same country and like op already explained, the removal of subsidy from petrol in the country has made citizens to start paying more than 2x more for a liter of the product, compared to the amount a liter was sold before, this over 2x price goes where?, it goes to the government, so yeah, that's more money for them and for whatever project they are embarking on, but then, the big question is, can such a move save an economy that is already in shambles?
This will be a good policy if the government will sincerely use the money that will be saved from subsidy removal to invest in the country. If the saved funds will be used to build basic infrastructure that will lead to development, then it is good. But if the money will be misappropriated and stolen by corrupt government officials, subsidies should continue. In some countries, subsidized goods or services are the only benefits they get from their government.
With the rate is of inflation, subsidy removal shouldn't be what a government should be thinking about right now. They should be making moves on how to reduce inflation. The price of every single product or service has skyrocket even when the price of petrol was subsidies, so imagine what would happen when the government no longer pay fuel subsidy.
Petrol has a ripple effect on everything in an economy because almost everything needs to be transported and this transportation needs petrol. So when the petrol price goes up, transportation price goes up, therefore increasing the price of goods and services even further.
For a country as corrupt as Nigeria, you can't even trust the numbers the government put out as the amount they they spend on fuel subsidy. They could be paying half the price they put out to the public while they embezzle the other half.
I am certain that the money won't be put into better use, it would just find it's way into some people bank accounts.
Imagine how this sounds for a European who pays double the petrol and diesel cost since half of the price is just taxes!
You can't compare only the prices of petrol without looking at other factors. You just did in the other half of your response
Factors like cost of living, standard of living, minimum wage, employment rate, inflation rate, per Capita income, availability of basic amenities and many more. All these factors should be considered when comparing the prices of petrol of two different countries.
Which is better, to pay the subsidies and make things less expensive for it's citizens (who most of them are middle and lower class) or don't pay the subsidies and then the poor can no more afford that particular product, in this case petrol.
It's not about what's better but what's sustainable and affordable by the government!
Yeah, everything is great if it's subsidized, let's have cheap energy cheap petrol, free health care, free everything, what can go wrong?
Well, I've lived in a country that had these, the pinnacle of communism where we had all these but with rations and we couldn't even afford them as we were dirt poor. Cause somebody has to pay for those subsidies and if the subsidies cost more than the returns you end up in the garbage bin just like the USRR and its satellite states.
I know it, it's great for poor people to have cheap lodging, to enjoy some affordable cheap food but if this is done in the form of subsidies somebody else is paying for it, and if the returns are not the same someone will have to continuously pay more and more for it till you have the entire population going poor and you have to subsidies them all from funds that are no longer there.
Been there, lived through that and I have seen it a hundred times, there is no way it is sustainable long term.
Honestly, subsidy is truly a good benefit from the government. It is their duty to give subsidy to the most important services that their people need. Petrol is one of it because everything is being run and using petrol / oil for every move. Transportation, energy, and anything that we're using is being done with the use of petrol unless there's another source of it. Health care is also one of it, if a government isn't corrupt, there's a lot of sector where the government can provide subsidies. That's gonna ease the inflation rate that's being felt by everyone. On the other hand, it should be balanced, I also did saw some countries that have been giving subsidies to their people but still don't do good with their economy.
Through subsidy the government has helped them directly. With subsidies, consumers are able to access cheaper products and commodities. Subsidy can be in any form such like cash, grants, or tax. With subsidies, consumers are able to access cheaper products and commodities. An through this, government gives people grants to support their businesses. Subsidy helps people in their hard time, huge people depend upon subsidy. It's main aim is to reduced prices, thereby improving the state of the economy.
Subsidies from the government can also fight companies that sell products at high prices. So that citizens can be more helped by having the same product from the government for a lower price so that citizens no longer find it difficult to get every product they want in their lives at a very affordable price level. This of course will greatly help the economy of the small community at the lower level because they can continue to rotate their capital in the small business they have to continue to make money in their life.
I agree more that subsidies from the government can continue to exist in all countries so that small business owners in each country can continue to operate and develop independently so that the country's economic conditions will also be better in the long term. Because if things like this can continue to be sustainable between the government and its citizens, then it will always give birth to prosperity in the community and there will be no prolonged difficulties in society.
Imagine how this sounds for a European who pays double the petrol and diesel cost since half of the price is just taxes!
You can't compare only the prices of petrol without looking at other factors. Factors like cost of living, standard of living, minimum wage, employment rate, inflation rate, per Capita income, availability of basic amenities and many more. All these factors should be considered when comparing the prices of petrol of two different countries.
It's pretty simple your country can't afford to pay the subsidies anymore, I can guess it's Nigeria??
Same thing anyhow, you can't offer subsidies if the returns are not worth it just to keep your people happy, In Venezuela, and Iran, at one point you run out of money, and then you have to face the reality that you were just wasting taxes to keep the population under control.
Same thing anyhow, you can't offer subsidies if the returns are not worth it just to keep your people happy, In Venezuela, and Iran, at one point you run out of money, and then you have to face the reality that you were just wasting taxes to keep the population under control.
Which is better, to pay the subsidies and make things less expensive for it's citizens (who most of them are middle and lower class) or don't pay the subsidies and then the poor can no more afford that particular product, in this case petrol.
The price of petrol in a country like Nigeria affects everything. It's affects the price of every single goods because those goods are transported. So even if you're offering a service and needs no transportation, you will need to increase your rates in order to be able to afford stuff. That's a whole new level of inflation over again.
These countries, Venezuela, Iran, Nigeria didn't run out of money because their are no returns but because of mismanagement of funds of those responsible. When they run out of money to steal they come up with a different strategy.
Through subsidy the government has helped them directly. With subsidies, consumers are able to access cheaper products and commodities. Subsidy can be in any form such like cash, grants, or tax. With subsidies, consumers are able to access cheaper products and commodities. An through this, government gives people grants to support their businesses. Subsidy helps people in their hard time, huge people depend upon subsidy. It's main aim is to reduced prices, thereby improving the state of the economy.
In general, I'm not a huge fan of subsidies. Subsidies might be necessary in some instances, but I think it should be considered as the last resort. To a certain extent, a government that has limited resources but is all too willing to provide subsidies left and right is an incompetent and lazy government. It's a government that's not creative or innovative enough, a government that doesn't study, analyze, and look for other ways and means to improve certain conditions. Subsidies are dole-outs. They're a band-aid solution. They're not sustainable. Money put into subsidy is most often money that is wasted.
I am not satisfied with the fact that the money for subsidies is wasted. If social services are well developed in the country and any citizen can apply for help, then this reduces crime in the country. And for low-income families, this is one way to survive in a difficult situation.My point is, you can't address every problem with a subsidy. Subsidy is necessary in certain aspects, but it can't be a permanent solution. If the government's response is merely subsidy, such government is not working. It's not diving into the root cause of the problem.
I once created a thread here about the price of onions in my country reaching as high as $13 a kilo. As expected, the word subsidy surfaced. I don't agree it's necessary. Why is it expensive to begin with? Perhaps there is a need to create a strong agricultural program for onion farmers. Perhaps there is a need to bring down prices of fertilizers. Again, not by way of subsidy but something else more permanent. Perhaps there is an urgent call to courageously confront cartels and hoarders and smugglers. Or perhaps there is a need to craft policies in relation to the handling of agricultural products.
I mean there must be a number of ways to confront a problem other than simply providing subsidy. Subsidy will indeed bring down the prices almost instantly. That will appease the public. That will give the administration a good face in the media. But will it last?
In general, I'm not a huge fan of subsidies. Subsidies might be necessary in some instances, but I think it should be considered as the last resort. To a certain extent, a government that has limited resources but is all too willing to provide subsidies left and right is an incompetent and lazy government. It's a government that's not creative or innovative enough, a government that doesn't study, analyze, and look for other ways and means to improve certain conditions. Subsidies are dole-outs. They're a band-aid solution. They're not sustainable. Money put into subsidy is most often money that is wasted.
I am not satisfied with the fact that the money for subsidies is wasted. If social services are well developed in the country and any citizen can apply for help, then this reduces crime in the country. And for low-income families, this is one way to survive in a difficult situation. 
The subsidy can be given by government if they are stable enough with the national reserves and their yearly revenues. From where they fill the treasury? From the taxes that we pay so definitely we need subsidy but we also need population that is strong enough to pay their taxes on time and every time. Various countries do not get as much taxes as any powerful or highly developed country gets. This leads to under income of the government and thus over burden on planning and executing the schemes like subsidies. Apart from this we need to understand that subsidy is not free coupon, we do have to payback the left over amount all the time along with interest. Many people fail to do it.
Let's not forget that a significant portion of any budget is spent or misused. You have to go through a lot to get a subsidy. Sometimes the amount of the subsidy does not correspond to the moral and financial costs of receiving it. Therefore, it is often worth considering whether you should start getting a subsidy or whether it is better to save your nerves
I think what's more to be wary of is the people's overreliance of the subsidy given by the government. Well of course there must be a subsidy because we are paying taxes and that is where our money goes, to help each individual in need. However, if a person is only relying on it, for their food, for their shelter, for the allowances, then there won't be security in that.
People who become complacent in their life. They have a complete body yet not working. They are sitting on their couch all day blaming the government for the life that they have right now.
The subsidy can be given by government if they are stable enough with the national reserves and their yearly revenues. From where they fill the treasury? From the taxes that we pay so definitely we need subsidy but we also need population that is strong enough to pay their taxes on time and every time. Various countries do not get as much taxes as any powerful or highly developed country gets. This leads to under income of the government and thus over burden on planning and executing the schemes like subsidies. Apart from this we need to understand that subsidy is not free coupon, we do have to payback the left over amount all the time along with interest. Many people fail to do it.
Let's not forget that a significant portion of any budget is spent or misused. You have to go through a lot to get a subsidy. Sometimes the amount of the subsidy does not correspond to the moral and financial costs of receiving it. Therefore, it is often worth considering whether you should start getting a subsidy or whether it is better to save your nerves
One possible approach could be a gradual phase-out of subsidies, allowing people and businesses to adapt and find alternative solutions. Governments could focus on implementing measures that promote economic growth and job creation, which could ultimately help mitigate the impact of subsidy removal.
If, for example, subsidies are not removed, I think the government can still make some changes to economic growth as long as the government can arrange every step needed by its citizens. Because in general subsidies can also help most people get the things they need every day at more affordable prices, so if the government continues to implement this, I don't think the economic conditions themselves will be too disturbed. Especially if there are some people who still really hope for subsidies from the government and do not agree with it being abolished.Quote
Also investing in education, infrastructure, and sustainable industries could lead to long-term benefits for the economy and its citizens. Empowering businesses and individuals through grants and programs can also be a way to support economic growth without solely relying on subsidies.
Almost all government parties are very concerned about education, infrastructure, and industry in their own country. The point is to maintain development stability and also a more capable economy every year, because when these three things are always actively used by all people, of course the benefits that can be felt by the community and the country will be very visible. So that economic growth and education will also be better, especially if there is always support from the government itself for these three things. Jump to: