General subsidies

General subsidies

Subsidies guarantee access to essential commodities at prices that consumers can afford.^[1] The rationale for using subsidies is based on the potential to shift consumption as well as on low operating costs as beneficiaries are not administratively targeted. Although subsidies require little administrative capacity, they tend to be expensive and regressive with respect to targeting the poor.

Universal/Indirect price supports for food are open-ended, untargeted subsidies that attempt to lower the price paid for staple foods. Controlling these prices responds to the need to prevent prices from becoming too high. The interventions are implemented via indirect taxes or producer subsidies which are often part of general price stabilization efforts.

Subsidized untargeted sales take place at public distribution centers or designated private outlets on a first-come, first-served basis. Quantities may be rationed by limiting the amount households may purchase.

Subsidies for energy and utilities most often include gasoline and diesel used for transport and for electricity generation; kerosene for lighting and heating; and liquefied petroleum gas for cooking. Their costs can be higher than for food subsidies, while their targeting efficiency tends to be much lower than for food.