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25% reduction in kerosene subsidy this fiscal year

By Newsd
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With the government increasing supply of cooking gas and electrification in rural areas, the kerosene subsidy is set to take a nose dive. The Centre is reducing kerosene supply by 5% a quarter which, along with additional voluntary cuts by some states, small increases in retail prices, and roll out of direct cash transfer for beneficiaries, is estimated to reduce sales and subsidy by 25% by the end of this fiscal year.

Talking to Economic Times, Oil Minister Dharmendra Pradhan said, “There is a consensus emerging between the Centre and the states that subsidy will have to be targeted.”

“The effort at targeting subsidy has been greatly aided by the availability of Aadhaar and national socio-economic database,” Pradhan added.

“With increased access to power and cooking gas, everybody doesn’t need subsidised kerosene,” Pradhan said, adding that the states have also realised that their revenue collection from petrol pump sales was lower as some of the subsidised kerosene made way to the grey market and states, therefore, have reason to support targeting of subsidy.

Sale of subsidised kerosene, meant for lighting and cooking for the poor, fell 4.2% to 6.8 million metric tonnes in 2015-16 but this year until August, the fall has been much sharper at 10%. In August, the consumption fell by 17% and the trend is set to continue as the financial year draws to a close with the reduction in allocation of subsidised kerosene to states.