Faced with a rising subsidy burden, the Centre is likely to review a long-pending proposal to include kerosene in the direct benefit transfer scheme.
“Kerosene is one of the only items in the fuel bill where subsidy related reforms have not taken place. We will put up the proposal with the government to include it in the DBT scheme but it will be a political call to a certain extent,” said a senior government official, adding that a decision can be taken only if state governments are on board as well.
Pilot studies carried out in nine districts including Alwar in Rajasthan earlier were extremely successful, the official said, adding that the scheme can be introduced gradually across the country.
But consensus with states is essential as kerosene is given to beneficiaries through the public distribution system shops that are largely managed by state governments.
While the former UPA government had initiated talks with some states, the plan was never put into action. At the time, as many as 12 states including Rajasthan, Maharashtra and Himachal Pradesh are also understood to have indicted their willingness to join the scheme.
The proposal now seems to be getting ready for a revival as the Centre looks to cut down its subsidy bill as it tries to control its fiscal deficit.
“Introducing DBT for kerosene is one of the issues that may also be looked into by the Expenditure Management Commission that is expected to look into subsidies,” another government official said.
According to latest data, the government pays a subsidy of Rs 32.98 per litre on kerosene along with an additional subsidy of Rs 0.82 per litre. The under-recoveries for 2014-15 are estimated at Rs 91,665 crore as against the Budget allocation of Rs 63,426.95 crore for fuel subsidy. For 2013-14, the under recoveries are estimated at Rs 1, 39,869 crore.
Finance minister Arun Jaitley too, had recently stressed the government’s commitment to reviewing the subsidy regime.
Criticising the current subsidy regime, he had said on August 16, “Even people like me are entitled to get benefits of subsidy on diesel, cooking gas and kerosene but question is, do I need it and do I deserve it?”
Kerosene is the only component on the fuel bill where there has been no action to plug leakages or lower the subsidy.
While petrol prices have been freed, prices of diesel are also expected to be market linked by the end of the fiscal.
The government has also capped the number of subsidised cooking gas cylinders to 12 a year for every household.