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Informist, Tuesday, Mar. 18, 2025

 

NEW DELHI – The finance ministry, which is set to use the entire Oil Industry Development Fund to finance part of fertiliser subsidy and Liquified Petroleum Gas subsidy in 2025-26 (Apr-Mar), will transfer INR 177.30 billion into the reserve fund out of net additional INR 514.63 billion sought in the second batch of the Supplementary Demand for Grants for FY25. The government has projected a draw-out of INR 126 billion from the Oil Industry Development Fund in FY26, according to the Budget documents. 

 

This is the first time that the government will transfer funds into the Consolidated Fund of India from the Oil Industry Development Fund in the Public Account of India. Out of the total fertiliser subsidy of INR 1.68 trillion for FY26, the government would draw INR 116 billion from the Oil Industry Development Fund and out of INR 121 billion LPG subsidy, INR 10 billion is expected from the fund, the Budget documents show. 

 

The government, in the FY26 Budget, has projected a draw-out of a total of INR 230 billion into the Consolidated Fund of India from three reserve funds in the Public Account — the Oil Industry Development Fund, the Agriculture Infrastructure and Development Fund, and the Universal Service Obligation Fund. The government has allocated INR 20 billion to the Department of Agriculture & Farmers Welfare and INR 84 billion to the Department of Communications from the Agriculture Infrastructure and Development Fund and Universal Service Obligation Fund, respectively.

 

The use of reserve funds to finance some expenditures helped the government project a lower fiscal deficit of 4.4% of GDP for FY26, against the expected 4.5% of GDP. After India's fiscal deficit ballooned to 9.2% of GDP in the aftermath of the COVID-19 pandemic, Finance Minister Sitharaman, while presenting the Budget for FY22, had committed that the government would bring down the deficit to 4.5% of GDP by FY26. 

 

The government has projected a closing balance of over INR 400.79 billion each for the Agriculture Infrastructure and Development Fund and the Universal Service Obligation Fund in FY26. It is only the Oil Industry Development Fund that will be completely emptied in the next fiscal year.   

 

The Oil Industry Development Fund is monitored by the Oil Industry Development Board in the Ministry of Petroleum and Natural Gas, formed under the Oil Industry Development Act 1974. The fund had INR 120 billion as of Mar. 31 2024, with the contribution of cess receipts and the internal resources generated by the Oil Industry Development Board, the petroleum ministry said.   End

 

Reported by Krity Ambey

Edited by Saji George Titus

 

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