Business Today says India is spreading its oil-shock bill across state ledgers

An analysis by Basudha Das in Business Today on 24 October draws on a 23 October Axis Bank Research report to work out who is bearing the cost of high oil prices in India. The report puts total support at about 1.7% of GDP this year, assuming crude averages $100. As long as retail prices stay frozen, every $10 rise per barrel adds 20 basis points of GDP to the burden.

The burden is split three ways. The central government carries 0.8% of GDP through a cut in fuel excise duty, a fertiliser subsidy up 21% year on year in April–August and only limited LPG price rises. The state oil marketing companies and the states, through lower VAT receipts, carry 0.7%. The RBI absorbs 0.2% through concessional currency swaps and intervention. Losses on LPG sales in the 2027 fiscal year are estimated at 57,000 crore rupees. Crude imports rose 46% year on year in September to $15.4 billion, and 46.3% in April–September to $90.6 billion. The Indian basket averaged $116.09 a barrel in September.

According to the analysis, gold customs duty, extra levies on fuel exports and the Economic Stabilisation Fund could open fiscal space of about 0.6% of GDP. That could hold slippage in the central budget to 20–30 basis points. The author stresses that the cost has not disappeared; it has merely been spread across different public-sector balance sheets. She concludes that if prices stay high, support will have to shrink and a larger share of the increase will have to reach consumers.