The Impacts of India’s diesel price reforms on the trucking industry

In 2011-2012, the Government of India spent over USD$15 billion subsidizing fuel products such as diesel, kerosene and liquid petroleum gas. The government’s total subsidy expenditure increased by 27 per cent from the previous year, significantly contributing to the deterioration of India’s fiscal balance. In addition, national oil companies incurred over USD$10 billion worth of under-recoveries as a result of having to sell fuel at below-market prices. In early 2012, the government initiated reforms to gradually raise the diesel price until it is aligned with market rates. This research report by the IISD's Global Subsidies Initiative (GSI) and the Delhi-based Integrated Research and Action for Development (IRADe), analyzes the vulnerability of India’s trucking industry to the diesel price reforms and provides policy recommendations for minimizing the negative impacts.