Zee Media Bureau/Rd. Alexander
New Delhi: With oil companies reporting loss due to sale of cooking gas and diesel below the actual cost, Fitch Ratings on Monday said the Indian government will have to depend on its FY 2014-15 budget to fund part of the current financial year’s oil subsidies bill.
The Indian government will have to rely on its budget for the financial year ending March 2015 (FY15) to fund a part of the current financial year`s oil subsidies bill, Fitch said in a statement.
Earlier in November, the government sanctioned Rs 17,772 crore cash subsidy to fuel retailers to cover for half of the revenues they lost on selling diesel and cooking fuels below cost in the September quarter.
The retailers included Indian Oil Corp (IOC), Hindustan Petroleum Corp (HPCL) and Bharat Petroleum Corp (BPCL).
The government allocated 650 billion rupees for petroleum subsidies in FY14, of which 450 billion rupees was used to pay oil marketing companies for the subsidy gap incurred in the previous financial year, said the rating agency in the statement.
This leaves the government with 200 billion rupees to meet its share of the shortfall between the subsidised price and the market price, known as under-recovery, said Fitch adding that this amount was likely to be insufficient, and that it is likely that the government will have to tap around 450 billion rupees from next year`s budget.