Asked for a response after Additional District Collector Yashwant Sonawane was burnt alive Union Minister for Petroleum and Natural Gas Jaipal Reddy stated that decontrol of kerosene prices was not politically and practically feasible. The huge subsidy on kerosene sold under the public distribution system (PDS) is the root cause of the thriving oil mafia. Just as devaluation of the rupee and reduction in the import duty of gold made smuggling it unprofitable, a well-thought-out policy on pricing of kerosene, coupled with other measures, can effectively stop adulteration of petrol and diesel.
The rationale for subsidising PDS kerosene is to provide cheaper fuel for lighting homes. But it is given to all ration card holders as a cooking fuel as well, albeit with lower entitlement. Thus, even in states where electrification of homes is near total, kerosene is given at highly subsidised prices (Rs 2 vs Rs 31 per litre). Using kerosene as fuel when there are cheaper alternatives, both in rural as well as urban areas, is a sheer waste of resources. When there is no subsidy for firewood, charcoal or cow-dung cakes, generally used as fuel in rural and semi-urban areas, what is the justification for subsidising kerosene? Or is the intention to replace all such fuels with imported kerosene and LPG at a huge subsidy and foreign exchange outgo?
It would, therefore, be prudent to restrict the sale of kerosene through the PDS only to below poverty line families. It would be even better if sale of subsidised kerosene is altogether abolished and cash compensation or higher entitlement of food grains is given in lieu to such families.
While foodgrains and vegetables should be cheap, fuel that is imported should be made expensive. Unfortunately it is just the reverse that is happening!
C S Jacob, on email
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