The petroleum ministry is actively looking at hiking the price of kerosene and LPG as recommended by the Kirit Parikh committee. The Kirit Parikh committee had recommended Rs 4-5 hike for one litre of kerosene and a Rs 250 hike for one LPG cylinder. However, the Centre has denied all these reports and says there are no plans to hike prices for now.
Parikh himself says there is no proposal to hike prices, but the number of subsidised cylinders may be reduced. He believes a cap at six cylinders is reasonable and it will also encourage people to use gas efficiently.
Also Read: Hike in LPG rates to affect only 1% of consumers: Govt
On kerosene subsidy, he says it is meant for poor people, or place where there is no electricity. According to him, in states like Gujarat where there is round the clock power, there is no need for kerosene subsidy. “People would prefer to have round the clock electric power than to have subsidised kerosene,” he adds.
Below is the verbatim transcript of Kirit Parikh's interview
Q: The cat and mouse game continues. Sources telling us that indeed there is work underway in the oil ministry to try and get the government to agree on hiking kerosene and LPG prices. On the face of it publicly the government says there is no proposal at this point in time. Do you believe that this government is finally going to bite the bullet as far as fuel reforms are concerned?
A: The spokesman said that there is no proposal to hike prices but he might reduce the number of cylinders you are entitled to for LPG at a subsidised price. Currently it is 12, which was raised by Rahul Gandhi from 9 to 12. However, there is really no justification for supplying 12 cylinders of LPG subsidised.
Q: Given the political backlash that the Congress faced on account of that liquefied petroleum gas (LPG) cap, do you see the BJP moving back to 9 cylinder cap or even 6 cylinder cap which is what it was originally meant to be?
A: Yes, I think 6 cylinder cap is quite reasonable. Most people if they use gas, some degree of care and economy, I think 6 cylinder should be adequate for most people. I think that will encourage people to use gas more efficiently. So I think that 6 cylinder ceiling is something that the government should impose maybe it cannot raise the price at this stage but it can do that. At least reduce the number of cylinders available to people.
Q: The experiment with diesel deregulation has worked. These marginal monthly hikes have gone down okay with the consumer. Do you believe that the government is going to take heart from that and move towards hiking kerosene prices between Rs 0.20 and Rs 0.50 a month? Do you think they will touch the holy cow of kerosene?
A: Kerosene is connected to people who do not have light and it is supposed to be given as a subsidy to those who do not have electricity. We are covering more and more people with electricity and states like Gujarat where electricity supply is quite stable and is available round the clock - there is a strong case for reducing kerosene subsidy. People would prefer to have round the clock electric power than to have subsidised kerosene.
If the same model of Gujarat electricity can be replicated in the next couple of years in the BJP run states then there will be a strong case for reducing Kerosene subsidy in these states and it would really be in the interest of people as well because most people would rather prefer to have electricity than pay almost the same amount of money for Kerosene.
Q: Do you believe that this time around in the context of the finance minister saying that populism does not win you votes, we could see the government make an announcement in the Budget about deregulating LPG, kerosene and of course fully deregulating diesel?
A: I think if you can convert into cash subsidy and particularly targeted cash subsidies if you can do that then there is a strong case for deregulating these products. I think we have to recognise that yes, this may not be politically popular in the short run but over the medium-term, it would certainly be acceptable by the people and they would see the good points coming out of it.
Anyway this government is not facing election in the next six months or next year. So they have time and this to my mind, to my understanding, is the right and appropriate time to take these measures. So I am not saying just don’t give subsidy to the poor, I am saying convert the price of kerosene and LPG to the right market price and give direct cash transfer as subsidy to the deserving poor.
Q: You are a veteran of many committees, does your gut tell you that perhaps we could see some of this realise this time around whether in the Budget or post that?
A: My gut feeling is yes indeed that we will see some very strong and effective measures in this Budget. I think the kind of quiet that government has maintained in the last few days or few weeks if you could say, no announcement is coming, nothing seems to be happening that gives a strong signal that a Budget would really produce - dramatic moves will be suggested in the Budget.
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