India to pay 100 billion rupees in subsidies

India’s federal government will pay about 100 billion rupees (US$2.18 billion) in cash to state-run refiners in the next financial year as compensation for selling products at mandated prices, a senior official said, as the government seeks to make its finances more transparent. The government has long issued so-called oil bonds to marketing companies to compensate them for selling products at a discount to shield consumers. Rating agencies scoffed at the practice, saying it masked the true extent of the fiscal deficit as the securities were kept outside the budget. Finance Minister Pranab Mukherjee said the government would phase out issuing bonds to oil and fertilizer companies and only pay the subsidy in cash. (March 3, 2010)