EGoM nod to cash subsidy for kerosene

An empowered group of ministers has in-principle agreed to give direct cash subsidy to the poor for kerosene, as recommended by a task force headed by Nandan Nilekani, but it will launch the scheme only after consulting the state governments.

"We cannot finalise any programme on kerosene unless we discuss (it) with the state governments," oil minister Jaipal Reddy said. The EGoM on fuel, headed by finance minister Pranab Mukherjee, met on Monday to consider recommendations of a task force on direct transfer of subsidies on kerosene, cooking gas and fertiliser headed by Unique ID Authority Chairman Nandan Nilekani.

"An in-principle decision has been taken with regard to kerosene but no decision could be taken on LPG (cooking gas)," an oil ministry official said. Ending subsidies would almost triple the price of kerosene. To protect the poor, the government will give them cash compensation but only to actual buyers of the fuel, government officials said. Kerosene is sold at Rs 14.83 a litre in Delhi while its market price is about Rs 40 a litre.

Oil Ministry will have discussions with state governments to evolve a consensus on the issue in next few weeks, Reddy said. The task force has proposed a mechanism to facilitate direct transfer of subsidies in the bank accounts of beneficiaries. The move will also curb pilferage and leakages.

"If state governments agree to cash transfer, then all beneficiaries have to have a bank account where the cash subsidy can be transferred," Reddy said.