India Government Spends Billions to Subsidize Fuel Use

IndiaGasDrumOnBike2010-06-29.jpg“An employee filled an oil drum in New Delhi on Friday. India’s government has decided to reduce popular fuel subsidies.” Source of caption and photo: online version of the NYT article quoted and cited below.

I smiled when I saw the ironic photo that appears above. It seems to imply that with government subsidies, even bicycle riders will buy motor fuel.

(p. B3) MUMBAI, India — The Indian government on Friday reduced popular fuel subsidies, a long-delayed change that will help policy makers reduce a big budget deficit but one that will also worsen already high inflation.

Policy makers said the government would stop subsidizing gasoline. Diesel, kerosene and natural gas would continue to receive support at a slightly lower level. India spent about $5.6 billion to subsidize fuel in the last fiscal year, which ended in March. State-owned energy companies added the equivalent of an additional $4.4 billion by selling fuel below its cost.
India and other big countries committed to eliminating energy subsidies at a Group of 20 meeting last year, but policy makers here had repeatedly put off the politically difficult change.

For the full story, see:
VIKAS BAJAJ. “India Cuts Subsidies for Fuels.” The New York Times (Sat., June 26, 2010): B3.
(Note: the online version of the article is dated June 25, 2010.)

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