In Interim Budget 2019, Finance Minister Piyush Goyal has projected the government's outgo on petroleum subsidies during the financial year to be Rs 37,478 crore, compared with the Rs 24,932.80 crore estimated in last Union Budget. The estimates for 2018-19 were marginally lowered in the revised estimates for the year to Rs 24,833.18 crore. when compared with 2018-19 (RE), the projection for the coming financial year are 51 per cent higher.
The increase in estimated subsidy outgo came even as the finance minister said in his Budget speech that the fiscal deficit would overshoot the Budget estimate for 2018-19 to hit 3.4 per cent of gross domestic product (GDP). The current account deficit for 2018-19 has been pegged at 2.5 per cent of GDP.
According to an earlier Business Standard report, the government could carry over as much as Rs 25,000 crore in pending petroleum subsidy payments to the coming financial year (2019-20, beginning April 1) — that would be a little more than the revised estimate for 2018-19.
Petrol and diesel prices went through the roof last year, breaching Rs 80 a litre and Rs 70 a litre, respectively, in Mumabi. In Delhi, petrol hovered around early 70s a litre level. However, they have come down to pre-February 2018 levels since (see chart below). This implies the 51% increase in the budgeted amount for 2019-20 also includes the rollover of the 2018-19 subsidy burden.
Due to the higher crude oil prices during the first half of the financial year, the country's import bill for the current year is set to increase by around 55 per cent — from Rs 5.66 trillion in 2017-18 to Rs 8.8 trillion — this year. Every $1 rise in this price increases India’s import bill by Rs 6,158 crore.