The Indian government has announced plans to cut subsidies for petrol and diesel for its citizens by as much as 50% over the next four years.
The announcement follows months of talks between the central government and the states, which led to the states agreeing to set up national schemes to provide subsidized fuel and electricity to the poor.
The government has also set up a Rs 6,000 crore fund to provide fuel subsidies to the poorer citizens.
“This move is aimed at ensuring that the poor and underprivileged people can have adequate financial support,” said the finance minister, Arun Jaitley.
The central government has said it will set up the scheme on a “demonetisation” scheme in the near future.
The scheme will provide fuel subsidy to households with annual incomes below 1,000 rupees ($0.65) a day.
The government says it will also subsidise petrol and electricity for households with incomes between 1,500 and 5,000 rupiah ($0,20-0.70) a month.
The finance ministry said the government has set up an additional fund of Rs 2,000 crores to be used to cover the shortfall.
The subsidy cuts are expected to be rolled out by December.
In an editorial on Thursday, the Hindustan Times said the “demonitisation” move had caused a “massive financial loss”.
The move has come as a major blow to the economy, which had lost $1.5 billion in the last three months.
The paper said the new scheme would help to alleviate a massive shortfall in the budget, which was due to be completed in February 2019.
The Indian government will also spend Rs 6.5 lakh crore on a massive road and bridge project, the Times said.