India Energy Subsidy July 2019 Update

The document details recent Indian government interventions in the energy sector, including a reduction in fuel excise duties to counter high oil prices and the launch of significant funding for solar power and electric vehicles. It also addresses the financial distress of electricity distribution companies (DISCOMs) and the legal rulings regarding stressed coal-fired power plants.

• To address high international oil prices in October 2018, the Central Government reduced the excise duty on gasoline and diesel by INR 1.5 per litre and required oil marketing companies to cut margins by INR 1 per litre. This combined reduction of INR 2.5 per litre was expected to result in foregone Central Government revenues of INR 10,500 crore (USD 1.6 billion) in fiscal year 2019.
• The Indian government announced INR 46,000 crore (USD 6.44 billion) in funding by 2022 for two solar photovoltaic initiatives: the Grid Connected Rooftop Solar Programme, aiming for 40,000 MW of cumulative capacity with INR 11,814 crore, and the Kisan Urja Suraksha Evam Utthan Mahaabhiyan (KUSUM), which will receive INR 34,442 crore to add 25,720 MW of solar capacity to transition agricultural electricity consumption.
• Phase-II of the Faster Adoption and Manufacturing of (Hybrid &) Electric Vehicles in India (FAME) scheme received a Cabinet announcement of INR 10,000 crore (USD 1.4 billion) for the period from FY 2020 to FY 2022. Additionally, Delhi has established a target for 25 per cent of new vehicles to be battery-powered EVs by 2023.
• The Supreme Court ruled in favor of independent power producers by striking down a February 2018 RBI circular that demanded stricter action against defaults by thermal power plants. This followed government measures to relieve stressed assets, such as granting secured coal supply for short-term power purchase agreements and preventing the cancellation of fuel supply agreements during insolvency proceedings.
• Electricity distribution companies (DISCOMs) are facing increasing financial distress, reporting combined losses of INR 24,000 crore (USD 3.4 billion) in the first nine months of FY 2019. This situation is exacerbated by Central Electricity Regulatory Commission (CERC) rulings allowing the pass-through of increased production costs—such as solar safeguard duties and Indonesian coal regulation changes—to DISCOMs via tariff hikes.
• While individual LPG cylinder subsidies under the Pratyaksh Hanstantrit Labh (PAHAL) direct benefit transfer fluctuated between INR 165 and INR 434 from November 2018 to June 2019, total net subsidies grew to INR 25,700 crore (USD 3.6 billion) in the first nine months of FY 2019. This increase is attributed to the expansion of connections under the Pradhan Mantri Ujjwala Yojana (PMUY) from 56 million to 72 million.

APA

International Institute for Sustainable Development (2019). India Energy Subsidy July 2019 Update. https://www.iisd.org/system/files/publications/india-energy-subsidy-briefing-july-2019.pdf

Chicago

International Institute for Sustainable Development. India Energy Subsidy July 2019 Update. 2019. https://www.iisd.org/system/files/publications/india-energy-subsidy-briefing-july-2019.pdf.

Wikipedia

{{cite report |author=International Institute for Sustainable Development |title=India Energy Subsidy July 2019 Update |date=July 2019 |url=https://www.iisd.org/system/files/publications/india-energy-subsidy-briefing-july-2019.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{internationalinstituteforsustainabledevelopment2019india, author = {{International Institute for Sustainable Development}}, title = {{India Energy Subsidy July 2019 Update}}, institution = {International Institute for Sustainable Development}, year = {2019}, month = jul, url = {https://www.iisd.org/system/files/publications/india-energy-subsidy-briefing-july-2019.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }