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

Twesh Mishra New Delhi | Updated on July 24, 2019

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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

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