INDIA: GENERAL METADATA

Data documentation

General notes

India is a federation comprising 36 sub-national jurisdictions that possess a certain degree of freedom in setting prices for energy generation, transmission, and distribution. For this reason, there may be variations between central and regional authorities in the adoption and implementation of energy-related policies.

The fiscal year in India runs from 1 April to 31 March of the following year. Following OECD convention, data are allocated to the starting calendar year, so that data covering the period April 2005 to March 2006 are allocated to 2005.

Methodological note

A large part of support to fossil fuels in non-OECD countries (and in a few member countries such as Mexico) takes the form of price controls or regulations benefitting final consumers. In many cases, this occurs through the government mandating state-owned oil and gas companies to charge lower retail prices, thereby lowering the revenues these companies collect through sales of fuel. This often results in the government subsequently intervening to compensate state-owned oil and gas companies for the losses they incurred in the downstream sector due to the regulated prices, with this compensation taking many forms. Some governments choose, for example, to compensate national oil and gas companies through targeted tax concessions (e.g., VAT exemptions) or equity injections.

This inventory focusses on the direct budgetary transfers and tax expenditures that encourage the production or consumption of fossil fuels, including those benefitting national oil and gas companies. For this reason, some of the measures classified here under "Producer Support Estimate" may have been introduced by governments with a view to compensating domestic, vertically integrated oil and gas companies for the lower prices they are required to charge at the retail level, resulting in these measures being connected to some extent to consumer support.

Estimates of the support directly conferred to final consumers by regulated prices are available from the International Energy Agency (IEA), which estimates these induced transfers as part of its annual "World Energy Outlook" publication. Readers are therefore advised not to add together the OECD and IEA estimates given the significant risk of overlap and double-counting this involves.

Producer Support Estimate

Upstream operators of oil and natural-gas exploration blocks in India were subject to a hybrid tax regime under production sharing contracts (PSCs), which comprises fixed and ad valorem royalty payments, production sharing, and the recovery of contract costs (exploration, development, and production costs). In March 2016, India changed to revenue sharing contracts (RSCs) for hydrocarbon exploration through the Hydrocarbon Exploration and Licensing Policy (HELP). Under the new regime, the Government receives a share of the gross revenue starting from the day of production and has significantly reduced the amount of Government oversight.

Readers are advised that some fiscal measures related to oil and natural-gas production may not constitute tax expenditures under an alternative baseline where resource taxes (or production taxes) vary with market conditions and production costs. This inventory uses the annual amounts of tax expenditures as reported in India’s Union Budget.

Footnotes

[1] The Republic of India currently consists of 29 states and seven Union Territories.