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    Gradual hike in fuel prices to continue; govt gears up for higher than budgeted subsidy bill for FY23

    economy | IST

    Gradual hike in fuel prices to continue; govt gears up for higher than budgeted subsidy bill for FY23

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    Sources told CNBC-TV18 that the government doesn't want to "shock the economy on fuel prices" and instead look at a slow pass-through. The additional food subsidy on FY23 annualised basis is likely to be not less than Rs 1.20-1.30 lakh crore, they added. 

    The gradual increase in fuel prices will continue as the government is looking at a slow pass-through of oil price shocks instead of a one-time steep hike, sources told CNBC-TV18 on Tuesday.
    "Don’t want to “shock” the economy on fuel prices," said the sources, who did not want to be named.
    The fuel prices were hiked for the seventh time in eight days as the oil marketing companies look to pare losses from rise in sharp oil prices amid supply concerns due to Russia-Ukraine war.
    Petrol price was increased by 80 paise a litre and diesel by 70 paise a litre today, taking the total increase in rates in one week to Rs 4.80 per litre. In the country's financial capital Mumbai, petrol price touched Rs 115.04 per litre.
    On subsidies, the sources added that the H1 FY23 additional food subsidy of Rs 80,000 crore on PMGKAY extension is broadly right. The additional food subsidy on FY23 annualised basis is likely to be not less than Rs 1.20-1.30 lakh crore, they added.
    The food subsidy is budgeted at Rs 2.06 lakh crore for FY23.
    While the H1 FY23 fertilizer subsidy outgo is likely to follow H1FY22 trend, said the sources.
    The government may have spent up to Rs 70,000 crore on fertilizer subsidy in H1FY22.
    The revised fertilizer subsidy outgo is at Rs 1.55 lakh crore for FY22 against the budgeted Rs 79,530 crore.
    The Centre is expecting higher fertilizer subsidy outgo than the budgeted Rs 1.05 lakh crore in FY23, added the sources.
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