Kerosene Subsidy Post Apm To Continue Only For Bpl Families

While deciding on phasing out subsidy on kerosene and domestic liquefied petroleum gas (LPG) by 2006, the government has also taken a view that after the dismantling of the administered pricing mechanism (APM) in the petroleum sector on April 1, 2002, subsidy on kerosene will be available only to the below poverty line (BPL) families.

The number of BPL families in each state and Union Territory will be provided by the department of food and public distribution. The monthly allocation for each family will be decided by the petroleum ministry in consultation with the finance ministry and the food and public distribution department, official sources said.

The ex-depot issue price of kerosene will be fixed by the petroleum ministry in consultation with the finance ministry. This price will remain fixed for a period of six months or one year.

To reduce the financial burden on the budget on account of this subsidy, the government may consider fixing a relatively lower excise duty on kerosene. The duty concession may be announced in the forthcoming Union budget.

Regarding the domestic LPG, the ex-bottling plant issue price will be fixed by the petroleum ministry in consultation with the finance ministry once a year.

The subsidy worked out on the basis of ex-bottling plant cost and issue prices will be administered through oil companies.

The government has worked out that at the existing retail price, the annual subsidy at an average international crude price of $25 a barrel, comes to Rs 6,370 crore for kerosene and Rs 6,450 crore for domestic LPG.

In case the subsidy on kerosene is reduced to 33.33 per cent and on domestic LPG to 15 per cent of the import parity respectively, it would come to stand at Rs 4,820 crore and Rs 2,390 crore respectively.