By Aftab Ahmed
NEW DELHI (Reuters) – The Indian government is considering spending another 2 trillion rupees ($26 billion) in fiscal year 2022/23 to protect consumers from rising prices and tackle multi-year high inflation, two government officials said. to Reuters.
The new measures will double the rupees 1 trillion impact to government revenues from tax cuts on oil and diesel announced by the finance minister on Saturday, according to the two officials.
India’s retail inflation surged to an eight-year high in April, and wholesale inflation is at its highest in at least 17 years, a major headache for Prime Minister Narendra Modi’s government ahead of elections to several state assemblies this year.
“We are totally focused on reducing inflation. The impact of the crisis in Ukraine was worse than anyone could have imagined,” said an official, who declined to be named.
The government estimates that an additional 500 billion rupees in additional funds will be needed to subsidize fertilizers, from the current estimate of 2.15 trillion rupees, the two officials said.
The government could also introduce another round of tax cuts on oil and diesel if crude oil continues to rise, which could mean an additional impact of 1 trillion to 1.5 trillion rupees in the 2022/23 fiscal year that started on 1 April, said the second official.
The two officials declined to be identified because they are not authorized to release the details. The government did not comment on the matter at first, outside business hours.
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