The government’s petroleum subsidy allocation for the next financial year must be between Rs 37,000 crore and Rs 50,000 crore taking into account expected levels of average crude oil prices and the exchange rate, experts say.
The government’s almost unchanged petroleum subsidy allocation for the next financial year may fall short as crude oil prices are expected to rise.
The government is hoping for lower subsidy bills over next two years as the global crude oil market struggles to rise despite the historic agreement between Opec and non-Opec producers to cut output. The government has budgeted Rs 25,000 crore toward petroleum subsidy in the current fiscal.
Mid-Term Expenditure Framework: Government Projects Petroleum Subsidy Falling To Rs 10,000 Crore In FY20
Modi government seems to be taking a lot of comfort from the low crude oil prices while banking on the domestic distribution reforms as it has projected a sequentially lower petroleum subsidy in the next two financial years.