As conflict in West Asia continues, the Asian Development Bank (ADB) today cautioned Asian countries against implementing broad fuel subsidies as well as cutting excise duty, The Economic Times reported.
During a presentation on the West Asia conflict's impact on Asian economies, ADB chief economist Albert Park warned that such measures could harm public finances. He also noted that crude oil prices will likely stay elevated for quite some time; hence, maintaining fiscal space is more important right now.
"Global crude oil prices are expected to remain higher for longer….You need to conserve fiscal space for any future contingencies," he noted.
1 May 2026
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Park further elaborated that price controls blunted price signals, and that tax cuts are on oil are regressive as high-income households consume more energy. He suggested cash cash transfer to protect the society's vulnerable section while advocating diversification of supply and acceleration shift to green energy.
The ADB has also expressed disagreement over the imposition of export controls on oil, gas, fertiliser and grains.
India's Position
Speaking to ET earlier, Park said that even as India's growth remains relatively robust, but risks also emerged from global disruptions.
According to him, India’s growth could slow down to 6.3% in the current fiscal year against the earlier projection of 6.9% but will recover next year eventually.
On the part of subsidies, he said that there is a clear trade-off between subsidies and investment and suggested better targeting of social protection and reducing inefficient subsidies to free up resources for infrastructure and long-term growth.
He also explained that India has a lot of different support programmes and some of them are overlapping with the same kind of beneficiaries.
On March 27, India reduced excise duties on petrol and diesel in an effort to shield consumers from rising fuel costs and contain inflationary pressures. At the same time, the government introduced windfall taxes on aviation turbine fuel and diesel exports as global crude markets remained volatile amid tensions in West Asia.
