Oil Ministry To Ensure Needy Not Denied Fuel Subsidy

Oil Ministry To Ensure Needy Not Denied Fuel Subsidy

A mechanism is in the works to ensure that the poor are not deprived of cooking gas or kerosene subsidy, which is slowly being phased out, oil ministry officials said. “What is at the heart of our thinking is that the needy and deserving must get subsidy but national resources shouldn’t be wasted upon those who can easily afford the fuel,” said an oil ministry official.

For decades, the policy has been to club subsidy with fuel, which made subsidy available to every user. Now, it will be clubbed with just the needy, he said. State oil companies, on directions of the government, have been periodically raising prices of cooking gas and kerosene to eventually align them with market rates.

This will prevent diversion and spare resources for other pressing national concerns.

Making sure only poor households receive fuel subsidy will require some hard work on consumer data, much of which is now available with the government.

“It’s doable. There are some practical ways of identifying poor consumers and ensuring subsidy reaches them alone. But there is no decision yet on which mechanism will finally be adopted,” said another official.

Implementation of direct cash transfer for cooking gas beneficiaries has given the government access to Aadhaar, or the unique identity number, as well as bank details. A pool of 2.5 crore poor households, who received gas connection under Ujjwala scheme, is a ready base of consumers that would need subsidy, said an executive at a state oil firm, adding that the challenge would be to use socio-economic data and Aadhaar details to identify the poor among older cooking gas customers.

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Going kerosene-free

“We are aiming to build a kerosene-free society since the fuel is a health hazard and many a time used as adulterant. But until we provide everyone with alternative energy sources for lighting and cooking, we will continue to provide kerosene,” the official said.

Kerosene consumption has already fallen by a third in April-June as rising supply of cooking gas and electricity helps people switch. States lifted 1,275 million litres, nearly 3% less than what the Centre had allocated in the quarter.

A key hurdle in making a kerosene-free society is the erratic supply of power, especially in rural areas, where people are forced to use kerosene for lighting, said a senior oil company executive. “Either state power companies should ensure sufficient supply in the evening, or the government should provide subsidised solar lanterns to poor families.”

Under the Ujjwala scheme, the government aims to enrol a total of five crore needy consumers by March 2019, which also means more subsidy burden.

In the past three years, the oil ministry has taken some key steps to curb subsidy, first, by encouraging affluent consumers to voluntarily give up cooking gas subsidy and then weeding out from this beneficiary list those consumers with more than Rs 10 lakh in annual income.

More than one crore consumers voluntarily have given up subsidy while around a million with more than Rs 10 lakh income have been barred. Read more

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