Economy

Centre saves ₹19,000 cr subsidy on lower kerosene consumption

Twesh Mishra New Delhi | Updated on July 24, 2019 Published on July 24, 2019

File photo

Rise in LPG and electricity connections helps the exchequer

The Centre has accrued close to ₹19,000 crore of subsidy savings because of lower kerosene consumption thanks to more cooking gas and electricity connections since financial year 2015-16.

“During the current fiscal we expect domestic kerosene consumption to fall to 3.3 million tonnes (mt) as compared to 6.8 mt in 2015-16. The steep fall in consumption has helped save the exchequer close to ₹19,000 crore,” an official told BusinessLine.

The Ministry of Petroleum and Natural Gas (MoPNG) makes a quarterly allocation of Public Distribution System (PDS) kerosene to States/Union Territories (UTs) only for cooking and lighting purposes. With the country closing in towards nationwide LPG penetration and 100 per cent household electrification, the PDS kerosene allocation to States/UTs is being lowered.

This has resulted in subsidy savings to the Centre and a push towards cleaner fuels for cooking and lighting purposes. Till date, Andhra Pradesh, Haryana and Punjab have declared themselves kerosene-free and do not get any kerosene from the Centre. All Union Territories except Andaman & Nicobar and Lakshadweep have also been declared kerosene-free.

To lure the States to lower their kerosene consumption, the Centre launched a cash incentive scheme in 2015-16. According to the Oil Ministry, Karnataka, Telangana, Haryana, Nagaland, Bihar, Rajasthan, Gujarat, Goa, Andhra Pradesh, Puducherry and Maharashtra have voluntarily surrendered a portion of their PDS kerosene quota in lieu of this cash incentive.

“Till date ₹500 crore has been disbursed to the States under this incentive scheme. Of this, ₹190 crore has gone to Karnataka alone as it was an early adopter,” the official said.

But reducing kerosene consumption is still a work in progress. Uttar Pradesh and West Bengal continue to corner nearly 40 per cent of the total PDS kerosene demand. For the second quarter of financial year 2019-20, the Oil Ministry has provisioned 7,70,608 kilo litres (kl) of kerosene. Of this, 1,44,396 kl has been earmarked for UP and 1,76,004 kl is for West Bengal. A Calcutta High Court order has directed the Centre to maintain kerosene supplies to West Bengal at the April 2017 levels. Many State governments avoid drastic curbs in kerosene allocation fearing a political backlash.

Published on July 24, 2019

A letter from the Editor


Dear Readers,

The coronavirus crisis has changed the world completely in the last few months. All of us have been locked into our homes, economic activity has come to a near standstill.

In these difficult times, we, at BusinessLine, are trying our best to ensure the newspaper reaches your hands every day. You can also access BusinessLine in the e-paper format – just as it appears in print. Our website and apps too, are updated every minute.

But all this comes at a heavy cost. As you are aware, the lockdowns have wiped out almost all our entire revenue stream. That we have managed so far is thanks to your support. I thank all our subscribers – print and digital – for your support.

I appeal to all our readers to help us navigate these challenging times and help sustain one of the truly independent and credible voices in the world of Indian journalism. You can help us by subscribing to our digital or e-paper editions. We offer several affordable subscription plans for our website, which includes Portfolio, our investment advisory section.

Our subscriptions start as low as Rs 199/- per month. A yearly package costs just Rs. 999 – a mere Rs 2.75 per day, less than a third the price of a cup of roadside chai..

A little help from you can make a huge difference to the cause of quality journalism!

Support Quality Journalism
This article is closed for comments.
Please Email the Editor