LPG, kerosene subsidies may be extended

The government is likely to extend by two more years subsidies on LPG and kerosene while asking the state-run oil firms to bear part of the Rs 14,000 crore under- recoveries due to unchanged prices despite a rise in the cost of raw material. Subsidies on LPG and kerosene, estimated at Rs 3,500 crore for 2004-05, were to be eliminated from the next fiscal and a difference of Rs 130 per LPG cylinder and Rs 4 per litre of kerosene between selling price and cost was to be passed on to the consumers. But the government is likely to extend the 3-year subsidy phase-out plan, drawn by the previous government, by another two years to 2007, sources said. The Rs 22.58 per cylinder subsidy on LPG budgeted in the interim budget for 2004-05 is likely to be enhanced to Rs 34 in the full budget to be presented in early July and that on kerosene to Rs 1.10 per litre from Rs 0.81 per litre budgeted.