finance ministry official. "There is no alternative to a 3-5 rupees increase in diesel prices."
It is not unusual for the government to rollover some costs into the following year's budget, although they are not publicly revealed. However, subsidy spending has massively overshot budgeted estimates for the last three fiscal years forcing up the amount of cost that the government rolls over.
If the economy was booming, Chidambaram would have easily absorbed higher subsidy costs. But GDP rose 5 percent in 2012/13, the weakest pace in a decade. Most analysts expect growth to weaken further this fiscal year, although the budget assumed a rebound to around 6.5 percent.
Ministry officials say the rollover is the result of India's cash-basis accounting, in which income is recorded when cash is received and expenses are recorded when cash is paid out. Many advanced economies follow accrual accounting, in which income and expenses are recorded as they occur regardless of whether cash has actually changed hands.
India's accounting method "never gives you the real picture of your finances," said Devendra Kumar Pant, chief economist at India Ratings & Research. "You start the year on the back foot as you have so much backlog to clear."