The Cabinet Committee on Economic Affairs (CCEA) approved the extension of PDS Kerosene and Domestic LPG Subsidy, 2002, and Freight Subsidy (for far-flung areas) Scheme, 2002, up to March 31, i.e. by one year.

The move will likely help reduce the under-recovery of oil marketing companies, said an official statement late Wednesday evening.

A subsidy of Rs. 22.58 per 14.2 kg. LPG and Rs. 0.82/litre on kerosene sold through the public distribution system was being provided under the scheme. The freight subsidy was being provided to consumers in far-flung areas. Both schemes had ended on March 31, 2014.

Last month, the Centre had deregulated the sale of non-PDS kerosene to check black-marketing of the fuel sold through the PDS. Market-priced kerosene sells for Rs.27.68/litre while PDS kerosene costs Rs. 15.14/litre. 

India consumed 7.1 million tonnes of kerosene in 2013-14 and with stagnant domestic prices, OMCs’ under-recoveries on the fuel had swelled to Rs.1.39 lakh crore in the previous financial year. It is estimated that OMCs are losing Rs.13.32 on every litre of kerosene.

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