Giving a lucid indication that government is inclined on elimination fuel subsidies, Finance Minister P. Chidambaram on Wednesday said that subsidies were clearly not sustainable, and that there was a need to work out ways to correct price distortions.

Speaking at Petrotech 2012, Chidambaram said that nearly three-quarters of India's crude oil requirements were met through imports from foreign countries, and the swelling subsidy bill had hiked the government's fiscal deficit drastically over the past years.

Chidambaram said that the burgeoning subsidy bill is the single biggest fiscal risk not only to Indian economy but to all developing countries of the world.

He also pointed out the fact that oil prices were determined globally. Speaking on the topic, he said, "While some provision is being made under oil subsidy year after year, we have found that provision is always way off the mark as oil prices are globally determined."

Referring to price discrepancies due to disproportionate taxation in various petroleum products, the finance minister said that it happened because of inefficient substitution of one fuel with the other. He held tighter product markets, increasing prices and swelling demand responsible for the slowdown in India's economic growth.

Before the global economic crisis in 2008, Indian economy was growing at a rate of more than 9 per cent. In 2011-12, the growth slipped to a nine-year low of 6.5 per cent.