Kitchen comfort under threat

Consumers may get only six subsidised LPG cylinders every year and pay the market rate for additional purchases in that year.

This recommendation, which may lead to less use of this ubiquitous device in Indian kitchens, could find its way in the report of the Kirit S. Parikh committee on sustainable pricing of petroleum products. The panel is likely to submit its report tomorrow.

If the recommendation goes through, consumers would have to pay around Rs 600 to Rs 650 per cylinder, almost double the amount they pay now.

Sources said the panel which met today to finalise its recommendations favoured market-linked pricing of petroleum products and subsidies only for the needy rather than the general population.

They said a final call on the recommendations of the report would be taken by Prime Minister Manmohan Singh after considering other factors such as inflation and political concerns.

Officials said the huge gap between commercial cylinders, which cost Rs 1,000-1,200 per 19kg cylinder, and the domestic ones often led to diversion of the later for commercial purposes.

The last Economic Survey had stated that the subsidy regime for LPG and kerosene had to be reformed so that “all the needy get the intended benefit... limit LPG subsidy to a maximum of 6-8 cylinders per annum per household”.

The B.K. Chaturvedi committee report submitted in 2008 had made a similar suggestion. But the Union government sat tight on the report as it was in an election mode then.

According to sources, the time is right for the government to limit subsidy — firstly, the fiscal deficit in this financial year is seen at Rs 4 lakh crore, which needs to be redressed and second, the government has a clear mandate for the next four years, which should help it to push through the unpopular proposal.

The Chaturvedi panel had said that the subsidy should be brought down to zero in four years. It said six cylinders should be subsidised in the first year, four in the second, two in the third and none in the fourth year.

Households should be encouraged to subscribe to the piped city gas network, wherever available.

For BPL families, the LPG subsidy as well as that for kerosene should be provided either through smart cards or through direct cash transfers, the panel said.

Oil ministry officials said subsidised prices of LPG and kerosene were “greatly misaligned… leading to huge uneconomic use and unintended benefits to certain classes of consumers”.

Kerosene and cooking gas cylinders comprise the lion’s share of revenue losses suffered by the three state-owned oil marketing companies — Indian Oil, Bharat Petroleum and Hindustan Petroleum.

Petroleum secretary S. Sundareshan said in the current financial year the three state-owned retailers were estimated to lose around Rs 31,000 crore on cooking fuels and around Rs 10,000 crore on petrol and diesel.