Notes
PETROLEUM PRICES,
TAXATION AND
SUBSIDIES IN INDIA
The views expressed in this Paper are those of the author(s) and do not necessarily reflect the views or policy of the International Energy Agency or of its individual member countries. Your comments are welcome, directed to india@iea.org
June 2009
©OECD/IEA, 2009
The current Indian system of effectively subsidised petroleum product prices has significant implications for the emergence of India as a major global energy consumer, for the integrity of
India’s Central Government budget and for investment in India’s growing oil and petroleum sector.
This paper is part one of a broader study that looks at the current system of petroleum pricing and the macroeconomic, microeconomic, regional and global effects of this system.
2
©OECD/IEA, 2009
A)
Introduction
The Secretariat is in the process of conducting a study on downstream petroleum product pricing in India. The study examines the current pricing mechanism and taxation and subsidy regime on four key petroleum products (petroleum, diesel, domestic kerosene and domestic
LPG). In the study, the implications of current arrangements in each of these markets for central and state government revenues and expenditures, for India‟s macro-economic positioning as well for upstream and downstream sector development are to be examined in detail. The present study is worthy of consideration for a number of reasons:
1. India as a globally significant oil consumer: In 2008, India was the world‟s fifth largest consumer of crude oil and petroleum products, with product consumption growing by over 5 per cent. India is forecast to become the world‟s fourth largest oil consumer by
2025, although per capita consumption rates are expected to remain well below typical
OECD rates. Given the growing significance of India as a crude consumer, it is important to understand and analyse the pricing and regulatory regime governing India’s petroleum
TAXATION AND
SUBSIDIES IN INDIA
The views expressed in this Paper are those of the author(s) and do not necessarily reflect the views or policy of the International Energy Agency or of its individual member countries. Your comments are welcome, directed to india@iea.org
June 2009
©OECD/IEA, 2009
The current Indian system of effectively subsidised petroleum product prices has significant implications for the emergence of India as a major global energy consumer, for the integrity of
India’s Central Government budget and for investment in India’s growing oil and petroleum sector.
This paper is part one of a broader study that looks at the current system of petroleum pricing and the macroeconomic, microeconomic, regional and global effects of this system.
2
©OECD/IEA, 2009
A)
Introduction
The Secretariat is in the process of conducting a study on downstream petroleum product pricing in India. The study examines the current pricing mechanism and taxation and subsidy regime on four key petroleum products (petroleum, diesel, domestic kerosene and domestic
LPG). In the study, the implications of current arrangements in each of these markets for central and state government revenues and expenditures, for India‟s macro-economic positioning as well for upstream and downstream sector development are to be examined in detail. The present study is worthy of consideration for a number of reasons:
1. India as a globally significant oil consumer: In 2008, India was the world‟s fifth largest consumer of crude oil and petroleum products, with product consumption growing by over 5 per cent. India is forecast to become the world‟s fourth largest oil consumer by
2025, although per capita consumption rates are expected to remain well below typical
OECD rates. Given the growing significance of India as a crude consumer, it is important to understand and analyse the pricing and regulatory regime governing India’s petroleum