After the sharp opposition to its Railway fare hike, the NDA government has decided to hold steady the administered prices of liquefied petroleum gas (LPG) and kerosene. This decision, confirmed to The Hindu by Oil Ministry sources, could push up the annual subsidy bill by about Rs. 20,000 crore.
Over the last fortnight, the Indian crude basket (that comprises 30 per cent Brent and 70 per cent Dubai grade) spiked to $112.4 per barrel from $107 per barrel, worsening the macroeconomy headache for Union Finance Minister Arun Jaitley. The growing subsidy bill will widen the fiscal deficit and disturb the budget arithmetic. A $10-per-barrel price surge normally widens the fiscal deficit by Rs. 40,000 crore.