Four more states/union territories around the national capital region have become ‘kerosene-free’, in what showed the success of the government’s drive to minimise usage of this fuel. According to official data, Andhra Pradesh, Dadar-Nagar Haveli, Daman-Diu and Puducherry haven’t lifted PDS kerosene for the first quarter of FY19. Allocation of kerosene to Chandigarh, Delhi, Haryana and Punjab had stopped earlier.
The overall allocation of kerosene by the Centre for the public distribution system has been falling over the years, with the pace of decline getting sharper in the recent years (see chart). The Pradhan Mantri Ujjwala Yojana under which BPL households are given LPG connections has accelerated the fall in consumption of kerosene, along with cash incentives given to the states on reduced kerosene off-take. The declining kerosene use has also brought down the oil marketing companies’ under-recoveries on the fuel, which along with LPG is still getting subsidy support from the Centre while the auto fuel prices are decontrolled.
The under-recoveries dropped from Rs 11,796 crore in FY16 to Rs 4,672 crore in FY18.
So far, more than 3.88 crore LPG connections have been issued under the PMUY. The government has been wanting to increase the use of cleaner LPG and has also increased the PMUY target to 8 crore compared with 5 crore envisaged initially, by including new categories of beneficiaries like forest dwellers, most backward classes, etc, apart from BPL households. In fact, around 30 lakh LPG connections were issued during the Gram Swarajya Abhiyaan which was observed for 21 days starting April 14, 2018.
A large share of kerosene is still being used for lighting rather than cooking. The draft national energy policy by government think-tank Niti Aayog notes that 26% of the rural households show an inclination towards kerosene-based lighting solutions. In comparison, kerosene serves as cooking fuel only for 1% and 6% of the rural and urban households, respectively. With the government claiming to have electrified 100% villages last month, the need of kerosene for lighting may go down, eventually. The government assumes a village to be electrified if at least 10% of the households have electricity connections.
The other factor that helped reduce use of kerosene has been the government’s focus on giving cash incentives to the states that voluntarily agree to cut their PDS kerosene quotas. As reported by FE earlier, states such as Karnataka and Telangana had settled for lower PDS kerosene allocations and received cash incentives from the Centre. Several others, including Gujarat, Punjab, Madhya Pradesh and Nagaland, have also cut down on their PDS kerosene demand. The cash incentives for taking voluntary cuts in allocations is calculated taking 90% of the 2015-16 allocation as the baseline.
Nevertheless, government officials still have concerns as many states, despite having a high number of households with access to electricity and cooking gas, continue to seek high kerosene allocations. Uttar Pradesh, for instance, has received more than 71.5 lakh connections under PMUY — the highest by any state—but its kerosene demand continues to be high. The state was allocated 2.2 lakh litre of the fuel during the first quarter of FY19.
Niti Aayog in a report, Action Plan for Clean Fuel, had recommended that Uttar Pradesh should ban the use of kerosene in order to ease the situation of air pollution. “Delhi and Haryana have banned use of kerosene but Uttar Pradesh is required to ban it. Use of polluting fuels such as wood and kerosene is especially common with households below poverty line (BPL) who cannot afford clean fuels despite availability and access. BPL households in NCR (National Capital Region) would, therefore, require targeted subsidies for switching to cleaner cooking fuels.” A recent report by the World Health Organisation on air pollution showed that 14 of the 15 dirtiest cities in the world are in India, and most of them in north India.
However, the government’s attempt to use the direct benefit transfer route for disbursing kerosene subsidy has seen limited success with only Rs 11 crore and Rs 113 crore transferred during FY17 and FY18, respectively.