Dual pricing for kerosene likely

The petroleum ministry has set in motion the process of introducing dual pricing for kerosene, under which the below-poverty-line consumers will continue to get the product at subsidised rates, while others will have to pay the market price.

The ministry has called a meeting of the chief secretaries and state food and consumer affairs secretaries on December 9 in this connection.

It has also circulated the recommendations of a study conducted by the National Council for Applied Economic Research among states. Officials said the meeting would also test waters for the introduction of dual pricing for LPG.

The Centre plans to introduce dual pricing for the two fuels to target subsidies for the poor. The annual subsidies and under-recoveries on these two products are about Rs 10,000 crore (Rs 100 billion) each.

The ministry is likely to propose that all households possessing the above-poverty line cards purchase kerosene at the market price (at economic cost to the government) while  subsidised PDS kerosene will be made available to people with BPL, Annapurna, Antyodaya or such cards indicating low income status.

Secretaries from 20 states and Union Territories are likely to attend the meeting. Executives of oil marketing companies like Hindustan Petroleum, Bharat Petroleum and Indian Oil Corporation are also likely to make brief presentations.

An official added that the meeting would discuss whether the delivery of kerosene for the above-poverty line families should be through the public distribution system.

According to an NCAER report, more than 38 per cent of the kerosene meant for distribution through the PDS gets diverted to the open market. It is sold to households without ration cards as well as to others for non-households usage.

Blackmarketing had resulted in about 18 per cent of the total PDS kerosene being sold to households at more than double the price, the study pointed out.

The study, commissioned by the ministry of petroleum, looked into the kerosene distribution system across states, assessed the demand for the PDS kerosene and determine future trends.

It suggested that the kerosene distribution should follow a method similar to that of grains through the PDS. Taking out the APL card holders from the purview of subsidies and controlling the leakage would bring down the subsidy bill substantially, the study said.