Kerosene and LPG subsidies need to be rationalized and special assistance should be provided to the BPL families when the prices of oil go up. Comment (200 Words)
Refer - Financial Express
Enrich the answer from other sources, if the question demands.
IAS Parliament 3 years
KEY POINTS
· Indeed, BPL families can and should be helped when prices go up, but without having multiple prices. The current mechanism is misused to generate black money, even in developed countries.
· This is indeed an encouraging development, driven by the NDA’s 100% electrification drive and the Ujjwala scheme, which promotes the use of LPG by BPL families by giving free connections. On the other hand, LPG consumption has increased from 13.1 mt in 2009-10 to 26.4 mt in 2019-20.
· In addition, the NDA government needs to be credited for initiating the process of decreasing the subsidy by increasing the price of subsidised kerosene and LPG in small increments.
· With a drop in international LPG prices, there has been a significant over-recovery of subsidies—this issue has not received media attention. In May, over-recovery was Rs 120 per cylinder.
· They must have expected backlash from consumers. Instead, they took recourse to increasing the price of LPG in small doses, which went unnoticed by consumers. Even more significantly, the opposition parties also did not protest.
· Adoption of direct benefit transfer for LPG has helped reduce the subsidy burden. The UPA started this, and the NDA later modified it. This has also helped minimise diversion and strike off duplicate or bogus LPG connections.
· When oil prices increase in the future, the government will come under pressure to support the poor to continue to buy LPG or kerosene.
· Instead of supplying LPG cylinders or kerosene below the market price, the government should adopt a modified policy of helping only the BPL families. They can be given a special fuel assistance grant when oil prices are above, say, $75 per barrel.
