- Impact on Fiscal Deficit:
- Fuel subsidies are a cost incurred by the government.
- They contribute to government expenditure.
- Large fuel subsidies can significantly increase the fiscal deficit.
- Impact on Trade Balance:
- Subsidized fuel prices can increase domestic consumption.
- This might lead to higher imports of crude oil.
- Higher imports can worsen the trade balance.
- The text does not explicitly detail the impact on trade balance.