India is likely to spend all of its $4.5b originally earmarked for petroleum subsidies for the year through March, despite having budgeted for $70 a barrel rude that now costs around $30, two unnamed state officials told Bloomberg.
The officials said this was because the government sought to boost liquefied petroleum gas usage in rural areas where villagers use dirtier fuels like wood or cow dung. In addition, government’s campaign to get well-to-do citizens to voluntarily give up subsidies failed to meet expectations as no cap spending was defined.
The administration of Prime Minister, Narendra Modi, has not yet publicized the data. However, according to the report, failure to cash in on the oil plunge would render India more vulnerable to global economic weaknesses and government is advised to review its budget deficit targets.
Fuel subsidies exceed India’s entire social welfare budget and remain a controversial issue in a country with more than 20% of the population living below the national poverty line.