A significant increase in fuel prices will be necessary in the coming days, the economic analyst Dhananath Fernando says. 

He further emphasized that the price of diesel should be increased to around Rs. 600 per liter.

Speaking on the “360” programme aired on TV Derana last night (25), economic analyst Dhananath Fernando made these remarks.

He further noted:

“The diesel price, on average, needs to go up to at least Rs. 600. Based on data as of May 6, the petrol price should also increase by at least Rs. 20 to Rs. 30. However, this can be partially balanced through subsidies. If fuel prices are not adjusted, what is happening now will continue. It will contribute to the depreciation of the rupee. If the rupee depreciates, fuel prices will rise again. This is the cycle we have seen before, and it is the path towards an economic crisis. It will have a significant impact on inflation. However, if fuel prices are not increased and the rupee depreciates instead, the impact on inflation will be even greater.”

He also stated that when increasing fuel prices, it is essential to implement fuel subsidies for selected social groups, Dhananath Fernando said during the discussion.

“Fuel prices should be increased regularly alongside a social subsidy system. Currently, the government is providing a subsidy of Rs. 100 per liter of diesel, according to official claims. However, if fuel subsidies are given broadly, the benefit tends to go to those who do not actually need them. Therefore, assistance should be targeted toward the poorest groups in a way that minimizes the burden on the public.

It would be possible to easily provide a diesel subsidy for public transport based on the number of kilometers driven. Rather than extending this benefit to the wealthiest people in the country, wouldn’t it be better to give it to those who travel by bus?” he questioned.