• Government to save Rs. 54,223 crore as oil subsidy dips 29% in 2015-16

    Subsidy on petroleum products has come down by nearly 29% in 2015-16, marking a saving of Rs 54,223 crore from the year-ago period on the back of low crude prices and market reforms.

    Latest government data pegs subsidy on domestic LPG (liquefied petroleum gas supplied in refills as kitchen fuels) and kerosene, the only two fuels subsidised by the government, at Rs 22,085 crore in 2015-16 against Rs 76,308 crore in 2014-15.

    Subsidy on LPG is estimated at Rs 12,092 crore for 201516, down from Rs 40,569 crore in 2014-15. Similarly, subsidy on kerosene declined to Rs 9,993 crore in 2015-16 from Rs 24,804 crore in 2014-15, oil mi nister Dharmendra Pradhan told the Lok Sabha in a written reply on Monday .

    The lower subsidy bill comes as icing on the cake for policy makers. India’s crude oil import bill for 2015-16 is likely to be half the previous year’s tab. The savings, combined with the additional mop up through excise duty hikes, would provide a wide financial berth for the government’s social sector projects.

    Outgo on crude import is estimated to drop 45% from $113 billion in 2014-15 to $62 billion, assuming an average price of $35 a barrel for the mix of crude India buys and an exchange rate of Rs 67 to a dollar for February and March 2015, according to the Petroleum Planning & Analysis Cell, the oil ministry’s market tracker.

    Market reforms, namely deregulation of diesel pricing from October 2014, and effective implementation of the scheme to transfer cash subsidy on LPG directly into consumers’ account also helped save government’s outgo.

    While there is no subsidy on diesel since Ocotber 19 2014, the cash transfer scheme has plugged leakage of subsidy by eliminating ghost connections, one of the key factors responsible for diversion of subsidised cylinders into the black market for commercial use. Buoyed by the savings, the government is pushing state-run fuel retailers to expand their network and is set to launch on May 1 an ambitious Rs 8,000 crore programme to provide free of cost gas connection in the name of women from five crore BPL (below-poverty line) families in next 3 years to increase clean fuel penetration in rural areas.

    Overall LPG coverage has been going up in the last few years in the country , estimated at 61.9%. Ryan Fitzpatrick Authentic Jersey

    Share This