IMF urges Asia to allow fuel price pass-through despite volatility, advising targeted subsidies instead, and warns India has limited fiscal space for further relief measures.
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The International Monetary Fund has called on Asian economies to allow fuel price increases to flow through to consumers, even as tensions in West Asia keep energy markets volatile.
IMF’s Krishna Srinivasan said governments should avoid suppressing prices and instead rely on targeted, time-bound subsidies for vulnerable groups. “Prices need to be passed through,” he said, stressing that such support measures should come with clear sunset clauses.
On India, Srinivasan noted that some fiscal space has already been used through fuel excise cuts and fertiliser subsidies. However, he cautioned that room for further support is limited.
He added that while inflation remains under control for now, countries like India will eventually need to allow full price pass-through to maintain fiscal discipline and ensure efficient energy use.
IMF’s Krishna Srinivasan said governments should avoid suppressing prices and instead rely on targeted, time-bound subsidies for vulnerable groups. “Prices need to be passed through,” he said, stressing that such support measures should come with clear sunset clauses.
On India, Srinivasan noted that some fiscal space has already been used through fuel excise cuts and fertiliser subsidies. However, he cautioned that room for further support is limited.
He added that while inflation remains under control for now, countries like India will eventually need to allow full price pass-through to maintain fiscal discipline and ensure efficient energy use.
