Cuts to India's costly subsidies on fuel, food and fertiliser are expected to be one of the main goals of the national budget this week as the Congress party-led government seeks to recover from one of the largest fiscal deficits for 20 years.

The roll-back of subsidies, usually given to state-owned companies, is one of the hottest political issues in India, Asia's third-largest economy. Subsidies account for more than 10 per cent of total government expenditure.

Increasingly, senior policymakers identify subsidy reform as a long overdue way of tightening public spending and directing relief more efficiently towards the country's most needy. A lower subsidy bill would help the government trim public spending after New Delhi widened the fiscal deficit to 6.8 per cent last year to protect high growth rates from the global economic downturn.