The subsidy payment requirement of the three state-owned oil marketing companies — Indian Oil, Bharat Petroleum, and Hindustan Petroleum — is around Rs 63,100 crore. This includes an estimated Rs 36,000 crore for the current fiscal year and pending dues of Rs 27,100 crore. The interim Budget
has provided Rs 37,478 crore for petroleum subsidies.
The subsidy figures are unlikely to be changed for the lack of additional spending room, the officials said. This means the unpaid amount to be rolled over for fertiliser will be Rs 37,014 crore, while that of petroleum will be Rs 25,622 crore.
“We will likely roll over a lot of pending subsidy payments to next year,” said an official.
“There have been discussions on whether a bulk of the pending payments can be cleared this year. But given the fiscal situation, that option isn’t there anymore,” said an official.
Officials say food subsidy isn’t a problem as, by their own admission, the government resorts to off-budget by the Food Corporation of India and dips into the National Small Savings Fund
to fund food subsidy bills. The estimated food subsidy budget for 2019-20 is Rs 1.84 trillion.
When Finance Minister Nirmala Sitharaman presents her first Union Budget
in the Lok Sabha on July 5, she is highly likely to forecast a fiscal deficit
target for 2019-20 at 3.4 per cent of GDP.
This target will be retained from the interim Budget, which was presented on February 1.
A major reason for the rising burden in the fertiliser sector is due to the non-revision of urea prices in almost eight years now. On the other hand, non-payment of dues by the government has increased the debt of IOC, BPCL and HPCL. A similar situation last year had increased the debt of the OMCs to a five-year high of Rs 1.62 trillion by the end of March 2019.
Based on the industry data, Indian Oil’s total debt was seen at Rs 92,712 crore, followed by Rs 42,915 crore of BPCL and Rs 26,036 crore of HPCL. This increase in debt was mainly attributed to the government's delay in payment of subsidy on liquefied petroleum gas and kerosene, of around Rs 33,900 crore combined, apart from a rise in their capex requirements.