Panel to look into cuts in sops on kerosene

In a step to remove subsidies on kerosene and fertilisers, the government has decided to constitute an expert group to look into reducing the subsidy burden as well as ensuring that only families below the poverty line get access to subsidised kerosene.

The group is expected to formulate a comprehensive strategy on this in order to meet the March 2007 deadline for phasing out subsidies on kerosene and LPG.

Estimates suggest that more than 38 per cent of kerosene meant for distribution through the public distribution system gets diverted to the market.

Sources said the finance ministry, in consultation with the Planning Commission and concerned ministries, will set up the expert group.

"Based on the recommendations of the expert group, a decision on the rationalisation of subsidies will be taken shortly," a government official said.

Petroleum and Natural Gas Minister Murli Deora recently told the Parliamentary Consultative Committee that supply of subsidised kerosene through the public distribution system would be restricted to below poverty line families.

The expert group will seek solutions to issues like identifying subsidies which can be targeted, quantifying the amounts that should be saved under each targeted subsidy and offering to transfer the savings in subsidies in order to mobilise broader support.

This decision was taken after Prime Minister Manmohan Singh's recent meeting with Planning Commission Deputy Chairman Montek Singh Ahluwalia and Finance Minister P Chidambaram on the next level of economic reforms.