Centre to discuss Nilekani report on direct kerosene subsidy with states

The Union government will discuss the recommendation of direct subsidy transfer for kerosene, made by a task force, with state governments. Currently, kerosene is sold at subsidised rates to beneficiaries and the subsidy is passed on to marketing firms.

“We cannot finalise any programme unless we discuss with the state governments,” petroleum minister S Jaipal Reddy told reporters after a meeting of an Empowered Group of Ministers (EGoM) that considered the recommendation of the Nandan Nilekani-headed Task Force on Direct Transfer of Subsidies on Kerosene, LPG and Fertiliser.

In its interim report to the government about a month before, it suggested ending the sale of subsidised kerosene. The sale price in Delhi is Rs 14.83 per litre, about Rs 24.93 a litre short of the desired price. It wants kerosene to be priced at Rs 39.76 a litre and the poor (the intended beneficiary) be given Rs 24.93 in cash for purchasing every litre.

“If state governments agree to cash transfer, then to give proper effect to such a proposal, all the beneficiaries have to have a bank account where the cash subsidy can be transferred,” said Reddy.

He said the EGoM, headed by finance minister Pranab Mukherjee, had accepted the interim report. Pilot projects may be launched to test direct transfer of cash subsidy to the targeted populations in a few states. Reddy said the proposal for limiting supply of subsidised domestic LPG cylinders to four per household in a year would be taken up at the next EGoM meeting.