With kerosene and LPG, govt faces a balancing act

Monthly increase in prices to eliminate subsidy could dissuade people from using clean cooking fuel

When Union Finance Minister Arun Jaitley presented the medium-term expenditure projections for the next two years last week, he estimated a nearly 64 per cent fall in petroleum subsidy at  Rs 10,000 crore. Among the three major subsidies — food, petroleum and fertiliser—petroleum is the only one that is expected to fall. 

The minister’s assumption is based on the current policies for cooking fuels — domestic LPG and kerosene. Petrol and diesel, which were earlier subsidised, are priced at market rates. Petrol was decontrolled in June 2010, while diesel, after phased monthly increases, became fully market-linked in October 2014. 

For kerosene, price