India's budget for 2012/13 should send a credible signal on fiscal consolidation by reforming the petroleum subsidy, Montek Singh Ahluwalia, deputy chairman of India's planning commission, said in an interview.
The government is expected to present a budget in mid-March for the fiscal year that begins on April 1, amid slowing economic growth and mounting concerns about public finances.
The original estimate for the fuel subsidy bill for this fiscal year was 236 billion rupees, but it is already 300 billion rupees more than that figure.
Fertilizer subsidies are set to top 900 billion rupees, against about 500 billion rupees originally budgeted.
The danger about the petroleum subsidy is that it is an uncapped subsidy," Ahluwalia said.
The rising subsidy bill has compelled New Delhi to seek parliament's approval for spending 978 billion rupees extra this year.
