India's Fuel Subsidies: Policy recommendations for reform

This policy brief summarizes two research papers on fossil-fuel subsidy reform in India and highlights the key policy recommendations.The Government of India spent over US$ 9 billion subsidizing fuel products - diesel, kerosene, LPG and, to a lesser extent, gasoline - in 2010-11. The Government's total subsidy expenditure (including for food and fertilizer) increased by nearly 27% in 2011-12, significantly contributing to the deterioration of India's fiscal balance. In addition, national oil companies incurred over US$ 8 billion worth of under-recoveries.