THE prime minister’s decision to subsidise petrol purchases for motorcycle and small-car owners is understandable amid consumer outcry against high fuel rates. But it is unlikely to offer much relief. The Rs75bn package may sound substantial but is barely a fraction of annual petrol sales. Its reach will be narrower because eligibility depends on conditions such as vehicle and SIM ownership. A monthly subsidy of Rs2,000 for motorcycles and Rs3,000 for small cars may help households, but cannot shield them from sustained global oil price increases. Nor does it assist those who rely on public transport. The question that arises is whether the government is trying to soften the political impact of another fuel price shock. The government must rethink the relief architecture. The BISP National Socio-Economic Registry already has a mechanism to target assistance by household income. Additional support through this system would be more equitable than subsidising a particular fuel purchase. Cash transfers are preferable because recipients can decide whether they need petrol, bus fare, food or another essential. Fuel subsidies make that choice for them and risk encouraging consumption of a
