x Abu Dhabi, UAEWednesday 26 July 2017

India's fuel subsidies may be cut further

India Dispatch: India’s finance minister has indicated that further cuts to fuel subsidies may be needed.

India's finance minister has indicated that further cuts to fuel subsidies may be needed.

"The current level of subsidy is not sustainable," said P Chidambaram, who came into office as in August.

"With less than adequate pass-through, subsidies on these products have burgeoned," he said, speaking at a conference in New Delhi. He was referring to diesel, kerosene and liquefied petroleum gas products, which are subsidised. Petrol prices in India are set by state-run fuel companies and as a result there is a disparity between petrol and diesel prices. "The problem is that these [subsidies] are clearly not sustainable and we must devise ways and means of correcting price distortions."

The Indian government last month increased diesel prices by 5 rupees a litre. It also capped the number of subsidised cooking gas cylinders that households were allowed to purchase.

This move was met with opposition and was one of the factors that triggered protests across the country, as many demanded that the decision be rolledback.

rbundhun@thenational.ae