Kerosene subsidy will also go; price to rise 25 paise every fortnight

Mumbai: The government has asked state-owned oil marketing companies to increase prices of subsidised kerosene by 25 paise every fortnight, according to a repot in The Economic Times. At present, subsidised kerosene is distributed through vast network of fair price shops known as Public Distribution System.

The Oil Ministry that controls country's top public oil marketing companies had issued similar order for kerosene last year. The fresh ruling on subsidy for kerosene comes just days after oil ministry announced it will phase out subsidy for cooking gas. By March next year, government expects to roll back cooking gas subsidy completely.

"The fuel is still heavily subsidised but demand for kerosene is falling sharply because villages are being rapidly electrified and the government has supplied cooking gas connections to crores of poor people in the past three years," ET report said.

The plans to scrap LPG and kerosene subsidy form part of government's series of "market oriented reforms" that according to the ET report have galvanised India's petroleum sector.

In recent years, the demand for kerosene as fuel has gone on a downward trajectory mainly on account of government's rural electrification initiatives. Supply of cooking gas connections to rural rural households has also impacted demand for kerosene.

Officials said oil minister Dharmendra Pradhan is keen to ensure that market pricing of fuels does not hurt the interests of the poorest sections of society, the report added. A relatively costlier kerosene will force consumers to switch to much cleaner cooking gas.