India to rely on next fiscal year's budget for oil subsidies: Fitch

Budgetary provisions insufficient; underrecoveries pegged at Rs 140,000 cr

Rating agency Fitch today said says Indian government will have to depend on its budget for the financial year ending March 2015 (FY15) to fund a part of the oil subsidies bill for the current financial year's (2013-14).

 

The government allocated Rs 65,000 crore for petroleum subsidies in FY14, of which Rs 45,000 crore was used to pay oil marketing companies for the subsidy gap incurred in the previous financial year, Fitch said in a statement.

 

Rating agency said this leaves the government with Rs 20,000 crore to meet its share of the shortfall between the subsidised price and the market price, known as under-recovery. This is likely to be insufficient, and it is likely that the state will have to tap around Rs 45,000 crore from next year's budget.

 

With Loksabha polls slated for April-May 2014, the UPA government will not present full fledged budget but can table only an interim budget. The new government would be in position to come out with full budget for 2014-15.

 

For the first half of the current financial year, the total under-recovery from diesel, public distribution kerosene and household liquefied petroleum gas (LPG) was Rs 60,900 crore. The subsidies for diesel accounted for Rs 28,300 crore. 

 

Assuming the under-recovery in the subsequent two quarters is around Rs 40,000 crore each, the total FY14 under-recovery would be Rs 140,000. The total under recoveries for FY13 stood at Rs 161,000 crore, Fitch added.