Minister of State (Independent Charge) for Petroleum & Natural Gas Dharmendra Pradhan goes by Prime Minister Narendra Modi’s prescription of bitter medicine to revive the economy, but stresses the government will not change the current subsidy regime for kerosene and LPG. He says in this interview that the government’s emphasis is on finding out innovative ways to address the problem of subsidies.
It had been estimated that if the government continues to raise the diesel price by 50 paise a month, the under-recoveries could be offset by September-October and it could then stop these monthly hikes. Where does that stand now?
Let’s see. We are not changing the present practice. I don’t want to jump to conclusions. There will be no increase in the price of domestic cylinders or that of kerosene, nor will there be any change in the current practice in diesel prices. The petrol price is already market-linked.
How do you then plan to handle subsidies, especially on LPG cylinders and kerosene?
We have to find some way. An increase in price is not the only answer. There could be target-based customers; there could be technology synergy. There is DBT [direct benefits transfer] also. It may be a small gesture but some PSU people, about 100 so far, have voluntarily given up subsidy [on LPG cylinders]. We will work with cooperation of the states regarding kerosene.
There was talk earlier of linking subsidies with income.
Let’s create a public debate. We can start with a positive model as shown by these PSU people. I haven’t forced them; there was no fatwa. I have congratulated them. There are 15 crore customers in the LPG sector. If people want to give up subsidies, they have to tell their respective dealers… and the dealers will inform the oil marketing company. Our prime minister’s idea is to look for innovative ways of subsidy management. Technology can also help in scrutinising the customer base to check duplication. Targeting is also a way. It’s just 40 days [of the government]. We have two challenges before the ministry — to reduce the import bill and to reduce the subsidy burden.
Despite a significant expansion in LPG connections and electrification across the country, why has kerosene offtake not seen any corresponding decline?
The central government’s role is to deliver kerosene and states have to distribute it. Every year, kerosene allotment is reducing but in a very miniscule way. As the amount of LPG connectivity increases, on a pro rata basis, kerosene allotment should decrease. Can we find some other way at some stage? We are investing in electricity, but there is no power in households. Power generation, grid supply, are the grey areas. I know there is huge pilferage of kerosene… but why deprive poor people? We have to take states into confidence to see how to reduce the burden [of kerosene subsidy]. Some states have created successful models. In Chhattisgarh, PDS is foolproof. In Gujarat, all major benefits are through technology-driven distribution systems. During Vasundhara Raje’s first tenure as chief minister of Rajasthan, there was a direct benefits transfer through technology. If our telephone companies can go for banking and other facilities using technology, why can’t the government? DBT could be a huge answer to this.
What exactly were your reservations about the C Rangarajan formula for gas pricing?
Even before the Rangarajan formula was brought to the cabinet, some serious concerns had been raised within the government. There were two important standing committees that expressed reservations about this formula. After it was taken to the cabinet, three important ministries, including finance and power, also put forth their reservations. Some portions of it were also under judicial consideration. There was a huge debate in the country on the basis of this formula, including in terms of net and gross calorific values. Then there was the issue whether to go for the spending model of a developed country like Japan. There were many other issues. As a new government, we have the responsibility to give a consumer-friendly and also business-friendly regime. The government is a trustee and it should be equal for everybody. So we thought, the cabinet thought, that let there be a relook at the whole gamut of issues. Let’s first have a dialogue with all stakeholders… In his reply to the motion of thanks on the President’s address, the PM categorically said the poor will have the first right over resources. This is Modiji’s philosophy of governance.
When we were in the opposition, our Leader of the Opposition in the Rajya Sabha had categorically said this is a federation. Right or wrong, the Indian government of the day took a decision and that cannot be challenged by a state government even if they [states] may disagree. Our government’s stand is quite clear on this issue and we had spelt it out even when our party was in the opposition.
Moily had alleged threats by import lobbies. Have you noticed any such thing in your ministry?
In the last three years, there has been a declining trend in two oil companies. If you [Moily] were so concerned, why didn’t you prevent it? This is all related to leadership. After 30 years, there is a single-party rule under a visionary leader. Lots of people not only in India but also in other developing countries are pinning their hope on this leadership. There will be no lobbies or pressures in the Modi government.