India’s sheer size and poverty have meant that addressing the needs of its hundreds of millions of poor and vulnerable citizens has preoccupied Indian policymakers since independence. Unsurprisingly, the mix of strategies, the resulting policy instruments to undergird them and their relative effectiveness have been a matter of contentious debate.

The Government of India has announced that subsidies on fertilisers, kerosene and liquefied petroleum gas will be replaced by cash transfers to end users. A close examination of the objectives of the subsidies in fertiliser and kerosene and the implications of the shift raises some challenging questions.

Climate change poses particularly difficult challenges for India. On the one hand, India does not want any constraints on its development prospects. On the other, it also wants to be seen as an emerging global power that requires a leadership role on key global issues like climate change.