- Prakash Singh/Agence France-Presse/Getty Images
- India’s richest 30% of households consume 72% of all liquefied petroleum gas, or cooking gas, while the poorest 30% consume just 2%.
In India subsidies of any kind are the sacred cow, the untouchable, the hot button political issue which could swing votes. That attitude has ensured that in 2009 India had the largest subsidy bill amongst net oil importers, as per the Organization of Economic Cooperation and Development's report card on the country's economy. And for a country that is often compared to China, for once it has left that neighbor behind—India's per capita oil subsidies were almost three times higher than China's, and its gas subsidies six times higher.
India's addiction to fossil fuels subsidies is well known. The OECD report doesn't offer any surprises there. But, as the report highlights, it's clearly a key concern for the country's overall growth. "Energy subsidies encourage wasteful consumption, fuel adulteration and smuggling and create a system that is overwhelmed by corruption," the report states. "Globally, by blurring market signals, they push up the level and volatility of energy prices, since when world prices rise India's consumption does not fall commensurately. Last but not least, they are environmentally damaging."
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