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Pricing drives economic decision making, and subsidies (along with taxation) are one of the key tools that governments use to influence prices, and through them investment decisions and consumer behaviour.

This update highlights the most significant developments in the dynamic domain of India’s energy subsidy policies in FY 2017 and explores the role that subsidies play with respect to four themes: energy access; the role of coal; prospects for renewables; and a transport sector transition. It finds that the total value of quantified energy subsidies has declined from INR 2,15,974 crore (USD 35.7 billion) in FY2014 to INR 1,51,484 crore (USD 23 billion) in FY2017. Subsidies to fossil fuels have declined over this period, while subsidies to renewables and electric vehicles (EVs) have increased. However, the absolute value of subsidies to fossil fuels is much greater than those to renewables and EV.