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Q. Need to end kerosene subsidy: In the backdrop of fall in consumption of kerosene, Comment on kerosene subsidy.
Oct 17, 2016 Related to : GS Paper-3

Ans :

Introduction-

It has been witnessed that a sharp 10% fall in the consumption of kerosene across the country from April to August the current year. Recently minister of petroleum and natural gas said that, government is expecting sharp fall in the kerosene subsidy due to increased supply of cooking gas and rural electrification.

Government’s initiatives to curb kerosene supply and subsidy-

  • Government of India has set the policy to cut per litre subsidies by 25 paise per fortnight from July 2016 to April 2017.
  • The government has successfully launched LPG supply campaign and over 4.5 crore people being moved off the list of subsidies, and this move cut around 3 crore duplicate users from subsidies.
  • Similarly government has successfully electrified more than 10000 villages, which in turn helped in reduction of kerosene usage.
  • Even the government looking for an sharper cut, of as much as 5% per quarter.

Analysis-

  • The various efforts that governments took in the last few years have yielded considerable result in reduction of the usage of the kerosene. Recently reported sharp fall of 10% in kerosene is good news for India.
  • But Indian system of subsidy suffers from various loopholes.  Subsidised kerosene sells at a huge discount to the market price.
  • It is largely diverted to adulterate petrol and diesel, which damages engines and intensifies pollution. Hence there is an urgent need to bring reforms in the subsidy regime.
  • Kerosene is one of the important cause for pollution and also it is huge burden on state exchequer, hence there is  proactive policy to phase out kerosene subsidies.

Suggestions-

  • To contain black market sale, Aadhaar-seeded bank accounts for subsidy disbursement must be used in case of kerosene.
  • Subsidised kerosene should be substituted with solar lanterns to cut pollution. It also cuts costs, given that there are no recurring expenses in solar lamps.
  • The government needs to phase out the subsidy on cooking gas for everyone except the poor.

Conclusion-

Recent fall in Kerosene supply is one the important achievement of the government. Various actions undertaken by government have yielded good result. Now government should focus on scrapping the subsidy in phased manner, for that government should ensure other energy sources to its entire citizens.


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