Kirit Parikh Panel: Poor can afford a hike in prices of SKO and LPG

Feb 3: The Expert Group on A Viable and Sustainable System of Pricing of Petroleum Products called for a transparent and effective distribution system for PDS kerosene and domestic LPG. This they said can be ensured through the UID/Smartcards framework but until that is operational, the following measures need to be taken:

•  There is disparity in per capita allocation of PDS kerosene amongst states, as also decline in the percentage of households using kerosene. Besides, households have flexibility in absorbing increases in price of PDS kerosene to certain extent.
• Therefore, PDS kerosene allocation across states should be rationalized, which will bring down all-India allocation by at least 20%. 
• Further reduction in PDS kerosene allocation can be done on the basis of progress of rural electrification, LPG and piped gas availability which is expected to reflect much larger reductions in next set of government surveys.
• The price of PDS kerosene needs to be increased by at least Rs.6/litre so that the share of expenditure on kerosene in the total consumption expenditure of rural households remains at the same level as in 2002. Thereafter, price of PDS kerosene be raised every year in step with the growth in per capital agricultural GDP at nominal price.

 LPG:

•  The committee has recommended that domestic LPG price be increased by at least Rs.100 per cylinder. Thereafter, the price of domestic LPG should be periodically revised based on increase in paying capacity as reflected in the rising per capita income. The subsidy on domestic LPG should be discontinued for all others except the Below Poverty Level (BPL) households once an effective targeting system is in place. 
• For calculation of the under-recoveries incurred by the OMCs on sale of PDS kerosene and domestic LPG, the import parity based pricing may be continued so long as the country remains a net importer of kerosene and LPG.

Source: www.indianpetro.com

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