BLOWBACK: India’s beleaguered government faced angry protests from its political allies as well as the opposition after it raised the price of diesel fuel in a bid to curb a ballooning national deficit.
SUBSIDIES: The government raised the price of diesel by five rupees (10 cents) a liter late Thursday. The price of diesel is regulated and kept much lower than gasoline prices in India. But the government has been under intense pressure to reduce its fiscal deficit by cutting spending for subsidies, particularly on fuel.
UNDER PRESSURE: Concerned by massive national subsidy bill, ratings agencies have threatened to downgrade India. The government has also announced a reduction in cooking gas subsidies. The price of diesel — important for farmers’ irrigation pumps and tractors, as well as trains and buses — is politically sensitive in India.
