What is the Current Status of Kerosene Subsidy in India?

In India as per 2011 Census data, 43% of the rural households use kerosene as their primary lighting source, compared with 0.7% who use kerosene as a primary source of cooking fuel. As per Energy Information Administration 2013, India accounted for 15% of the global consumption of kerosene, primarily for reasons mentioned above. The subsidy provided by the Government for kerosene has been reducing steadily over the years. The kerosene subsidy has come down from approximately Rs 24,700 crores in 2014-15 to approximately Rs 5,900 crores in the financial year 2018-19. The Government has been increasing the price of subsidised kerosene on a monthly basis to discourage the consumption of kerosene. For the next financial year 2019-20, the Government further reduced the allocated budget for kerosene subsidy to approximately Rs 4,500 crores. In the current financial year as per Government estimates the kerosene subsidy would be around Rs 1900 crores.

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How Many States have become Kerosene free in India?

As per March 2020 monthly report of Petroleum Planning and Analysis Cell (PPAC), a wing under Ministry of Petroleum, a total of 9 states/UT’s have become Kerosene free. Delhi was the first city in India to become kerosene free in 2014. Chandigarh was the second city to be kerosene free. Haryana became kerosene free in 2017. The other states and UT’s to become kerosene free are Punjab, Andhra Pradesh, Dadra & Nagar Haveli, Puducherry, Andaman & Nicobar Islands.

What are the Reasons behind Reduction in the Consumption of Kerosene?

There are various reasons behind reduction in the consumption of Kerosene are listed below.

1. Health risks associated with kerosene.
2. Government commitment to provide cash incentives to states that succeed in reducing kerosene consumption.
3. Pradhan Mantri Ujjwala Yojana – Scheme launched by Government of India played a big role in the consumption of kerosene. This scheme helped in increasing the number of Liquified Petroleum Gas (LPG)  consumers in India.
4. A big increase of the households getting access to grid electricity.

What were the Main Problems associated with Kerosene Subsidy?

The main problems associated with kerosene subsidy were theft, leakage and diversion. As per Government of India reports 41% of Public Distribution System (PDS) kerosene was lost due to leakage and theft in the supply chain  in the year 2011-12. This translated into loss of public finances to the tune of approximately Rs 8300 crores. The leakages were maximum in Uttar Pradesh, West Bengal, Maharashtra and Gujarat. These states had maximum allocation of subsidised kerosene. North Eastern states had the highest leakage percentage of subsidized kerosene. Nagaland was at 97%, followed by Manipur at 84% and Sikkim at 80%. Arunachal Pradesh had a leakage of 76% and Meghalaya at 70%.

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