Govt oil subsidy burden to be within budgetary allocation in FY2017 despite crude price rise; positive for upstream cos: ICRA

Govt oil subsidy burden to be within budgetary allocation in FY2017 despite crude price rise; positive for upstream cos: ICRA

With crude oil prices of $50-60 for the balanced months in FY2017, government oil subsidy burden to be around Rs 170-190 billion for FY2017, which would be well within budget allocation of around Rs 270 billion for the current fiscal, ICRA today said.“Thus, the fiscal position of the government of India is unlikely to be affected for FY2017,” K Ravichandran, Senior Vice President, Head Corporate Sector Ratings said.
The gross under-recoveries on subsidised domestic liquefied petroleum gas (LPG) and public distribution system (PDS) kerosene are expected to increase by around Rs 12-15 billion for FY2017 with every $5/bbl sustained increase in crude oil prices for the rest of FY2017.
The impact of higher crude oil prices on the government fiscal may be limited in FY2018 as well because gross under recoveries would not increase significantly up to crude oil prices of $60-65/bbl due to ongoing regular small hike in prices of subsidised LPG and kerosene on a fortnightly/monthly basis.Read More…

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