India To Encourage Non-Cash Payments

"In fact, what we say is that we have gone effectively from a carbon subsidiary regime to a actually high-carbon taxation regime in petroleum," he said.

The chief economic adviser said the implicit carbon tax on petrol is about USD160 per ton and on diesel is about USD70.

"We could have said we just pass all these gains to the consumer. But we didn't do that. Even macro-economically, it made a lot of sense. I think we passed on about one-thirds of 40 per cent in the form to private consumption. And the rest was public savings, which we kept in the form of higher taxes," he said.

He said the structural shift in inflation in India has caught markets and policymaking institutions by surprise.

"One, of course, is the whole oil picture. If that's going to be maintained that's going to be a benefit going forward. But that is a bit unpredictable. I think that is there. It's there going forward," he explained.

"The second is that the inflationary impulse coming from agriculture has changed quite dramatically," he said.

Subramanian said the budget foresees a big increase in disinvestment revenues."And there is a clear policy statement in the budget that next year this investment is going to include strategic sales and sale of loss-making units. So that's the policy vision. That's what underpins these more ambitious targets going forward," he said.
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