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Won’t slash oil subsidies now, but will phase them out eventually: Finance Minister, India

According to reports, amid pressure to lower oil subsidy, finance minister Pranab Mukherjee on Saturday ruled out removal of government support citing volatile fuel prices.

While reiterating India’s commitment to phasing out fuel subsidy, Mukherjee made it clear the government will adopt a “no one-size-fitsall approach to reform the subsidy regime” .

Pointing to the steps taken to deregulate petrol prices and hike diesel prices, the finance minister highlighted efforts related to direct subsidy transfer. “Even as we remain committed to reduce inefficient fossil fuel subsidies, the use of fuels, such as LPG and kerosene, for domestic purposes cannot be easily phased out in the near future. We need to ensure sustainable energy security for the poor, which would take time,” he said during a session on energy subsidy.

The issue has emerged as a key area of discussion as the civil society is demanding that the West undertake steps to address the issue of higher carbon emission.

Mukherjee, however, said completely reducing fuel subsidies is not an option for most developing countries “in the absence of reliable renewable energy” .

India on Saturday strongly opposed imposition of carbon tax as an additional source of funding to fight climate change. “India believes that some of the measures like carbon export optimization tax and levy on CDM/offsets violate the principles of the UN convention as their incidence falls entirely on developing countries and these cannot be recognized as a source of additional finance for climate change,” finance minister Pranab Mukherjee said at the G20 finance ministers’ meet on development, climate and innovative financing.

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