Asia’s third-largest economy, facing an over 40 per cent shortfall in collecting revenues from stake sales in state-run companies, is prioritising spending to try to limit its fiscal deficit to 5.9 per cent of GDP for this fiscal year to the end of March 

 India plans to cut equity investment by half, targeting USD 1.8 billion for the fiscal year 2023/24 to support green energy initiatives by three state oil refiners, sources reveal in a report by Reuters. With a fiscal deficit focus, the third-largest Asian economy aims to limit the deficit to 5.9 per cent of GDP by the end of this fiscal year, addressing a 40 per cent revenue shortfall from stake sales in state-run entities.

State-owned Bharat Petroleum Corp and Hindustan Petroleum Corp are committed to achieving net carbon neutrality by 2040, while Indian Oil Corp targets 2046. The budget for the current fiscal year allocates 300 billion rupees (USD 3.61 billion) in equity support to aid these sustainability goals.

The disbursement of funds will be phased, with the government offering 150 billion rupees in equity support for the year 2023/24. Media reports suggest the reduction in the amount stems from the refiners’ robust financial position, indicating that the initially proposed 300 billion rupees is not immediately required for their capital expenditure this year.

According to industry reports, the refiners foresee a significant increase in capital expenditure for energy transition projects in the next two to three years, negating the need for immediate funds. In parallel, Oil and Natural Gas Corp, the parent company of Hindustan Petroleum Corporation (HPCL), is set to increase the government’s stake by 1 per cent to 1.5 per cent through a preferential share issue, as reported by Economic Times.