Photograph by Divyakant Solanki, European Pressphoto Agency
A worker heaves a liquefied petroleum gas (LPG) cylinder onto a truck in Mumbai, India, where fossil-fuel subsidies weigh heavily on the nation's finances. Without a large network of piped natural gas for cooking, city-dwelling Indians rely on canisters of LPG, which the government provides at deeply subsidized rates.
Fossil-fuel subsides are more prevalent in countries that export fuel, but India, followed closely by China, has the highest subsidies among importers, totaling $22 billion in 2010.
A quarter of India's 1.2 billion people live below the poverty line, but here, as in other high-subsidy countries, the government supports are more likely to benefit the rich. An International Institute for Sustainable Development study catalogued how the overwhelming majority of Indians who use LPG as a cooking fuel live in urban areas, with most gas consumed by the well-off. Indian's rural dwellers tend to cook over coal, wood, or dung fires.
Globally, only 8 percent of fossil-fuel subsidies reached the world's poorest populations, according to the International Energy Agency, which has urged nations to move to direct spending on health and welfare programs that would target the poor more efficiently.
In 2010, India deregulated the price of gasoline, but public protests over that shift stymied reform. Fearing a public backlash, the government has not raised prices for cooking fuel or diesel since 2011, even though its central bank has urged fuel price increases to improve India's finances and slow energy imports.
Read More
