Govt. to subsidise fuel, expand welfare as Middle East tensions lift costs

The government will subsidise fuel, expand cash handouts and extend targeted support to key sectors, as the government moves to cushion the economic fallout from rising energy prices triggered by the conflict in the Middle East. Under the measures cleared at the March 30 cabinet meeting, the government will provide a subsidy of up to Rs.20 per litre on 92-octane petrol and up to Rs.100 per litre on auto diesel used for public transport, seeking to contain spillovers to daily living costs and broader economic activity. The relief package, presented by President Anura Kumara Dissanayake in his capacity as Finance Minister, also targets vulnerable groups and sectors most exposed to higher fuel and electricity costs.

Low-income households enrolled under the ‘Aswesuma’ welfare programme will receive a one-off payment in April, ranging from Rs.7,500 for families classified as extremely poor, Rs.5,000 for poor households and Rs.2,500 for those in the transitional category.

To shield smaller electricity users, the government will absorb additional costs arising from thermal power generation for three months, ensuring that consumers using less than 90 units are not burdened by higher tariffs linked to fuel price increases and dry weather conditions.

Agriculture support will be stepped up for the Yala season, with the fertiliser subsidy for paddy cultivation raised to Rs.30,000 per hectare from 25,000 rupees, while subsidies for additional crops grown on paddy land will be increased to Rs.18,000 per hectare. Farmers will also be able to purchase a 50 kg bag of urea at a fixed price of Rs.10,200 through Agrarian Services Centres. The fisheries sector will receive a subsidy of Rs.50 per litre for up to 25 litres per day for one-day fishing vessels, capped at 25 days per month over three months, while multi-day vessels will be granted a one-off payment of Rs.150,000. Small tea growers will be given an additional fertiliser allowance of Rs.5,000 per 50 kg bag, on top of the existing Rs.4,000 subsidy provided by the Sri Lanka Tea Board. The measures come as Sri Lanka faces renewed cost pressures from global energy market disruptions, with authorities seeking to balance social protection with fiscal constraints under its ongoing economic reform programme.