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Indian oil subsidy may surge to 2.2% of GDP

(Xinhua)
Updated: 2008-06-02 16:01

NEW DELHI  -- India's oil subsidy may surge to 2.2 percent of its GDP this year even when the Indian government dithers on raising fuel prices in step with the increase in crude oil cost, according to the Times of India Monday.  

India paid US$8.7 billion in oil subsidies or 0.7 percent of the GDP in 2007.      

India's GDP in 2008 is slated to grow to US$1.34 trillion, the subsidy may jump to US$18.1 billion or US$100 a barrel crude price. But  according to the current market price, it is expected to rise to US$29.2 billion.  

State-run fuel retailers like Indian Oil, Bharat Petroleum and Hindustan Petroleum face a revenue loss of Rs 225,040 crore (US$225 billion) on sale of petrol, diesel, domestic LPG and kerosene this year.      

Bharat Petroleum and Hindustan Petroleum reportedly will run out of cash to even import crude oil in July while India Oil can sustain imports till September.

However, even after several rounds of meetings the level of Indian Prime Minister Manmohan Singh and United Progressive Alliance Chairperson Sonia Gandhi, no decision has been made on either raising retail prices and/or cutting duties.

India with a high net import content is in greater need for price hikes and the country imports 75 percent of its oil needs.