G7 calls for an end to oil subsidies in India, China

TOKYO: Group of Seven nations called for an end to the oil subsidies used in China, India and Indonesia to shield domestic consumers from high energy prices.

“It should be avoided to artificially lower domestic energy prices through fiscal measures,” G7 finance ministers and central bankers said today in Tokyo. “It works against market- based adjustment of energy demand.”



The G7 also called on oil producing countries to increase production and refining capacity, noting that rising fuel prices and the risk of inflation are risks to global growth. An end to energy subsidies might cut demand in some of the world’s fastest growing economies, easing pressure on prices.

“Subsidies in places like China, India, Indonesia, have led to artificially high levels of demand,” said Glenn Maguire, chief Asia economist at Societe Generale in Hong Kong. “There’s probably a better way of spending that money rather than subsidizing energy.”