Provision of Energy Subsidies in Asia: Recent Trends, Patterns and the Determinants

Focused on Asia, this article conducts a threefold inquiry: first, recent global trends in the provision of energy subsidies are examined; second, patterns of energy subsidies by tracing constituent-wise growth over the 2015-2023 period in Asia are analysed; third, factors influencing the provision of energy subsidies in Asia are deciphered through panel data analysis. The study relies on the latest time-series data on energy subsidies provided by the International Monetary Fund (IMF). It finds that total energy subsidies across the globe are rising and Asia accounts for a significant global share. Within Asia, the West Asia region, mainly represented by oil-exporting nations, accounts for a relatively large quantum of energy subsidies. Similarly, import-dependent economies of China and India provide significant energy subsidies-in India, these are coal and electricity subsidies, whereas in China, oil subsidy and natural gas subsidies remain dominant. Regarding determinants of energy subsidies, the study has observed a significant impact of GDP per capita, GDP size, dominance of manufacturing and agricultural sectors, carbon intensity of GDP, renewable energy and so on in determining the flow of energy subsidies in general and coal, oil, natural gas and electricity subsidies in particular. It finds democracy a significant variable influencing the provision of energy subsidies in general but not in the Asian context. Detailed constituent-wise analysis of energy subsidies indicates relative dominance of environmentally polluting coal subsidies especially in the context of low-income countries, which hold large policy concerns. Similar is the case with oil subsidies. The prevalence of electricity subsidies in low-income countries highlights the relative lack of energy access which is much concerning due to affordability issues.