ECONOMY
ADB praises India’s fossil fuel subsidy reforms, promotion of green energy
- IBJ Bureau
- Nov 03, 2024
India has made significant progress on fossil fuel subsidy reform since 2010 through a well-planned “remove, target and shift” approach, says a new report by the Asian Development Bank (ADB).
“By carefully balancing the combined effects of three key policy factors – retail prices, tax rates and subsidies on select petroleum products – India was able to reduce its fiscal subsidies to the oil and gas sector by 85 per cent from an unsustainable peak of $25 billion in 2013 to $3.5 billion in 2023,” the report has said. In its’, ADB has said that India has gradually phased out subsidies on petrol and diesel (from 2010 to 2014) and gradually increased taxes (from 2010 to 2017), creating fiscal space to increase government support for renewable energy, electric vehicles and strengthening power infrastructure.
“The additional tax revenue collected from increased Excise Duty on petrol and diesel from 2014 to 2017 (a period of low crude oil prices) was redirected towards improving access and targeted subsidies to increase the use of liquefied petroleum gas (LPG) among the rural poor,” the report has noted.
Subsidies for LPG have increased, it said, and “efforts may now be needed to improve targeting and develop non-fossil fuel cooking options.”
Report By
View Reporter News