Much against the speculations, the government clarified that it was not mulling raising prices of LPG and kerosene. Reports suggested of government mulling a proposal for raising prices of cooking gas by Rs 5 per cylinder and kerosene by Re 1 per litre on a monthly basis, which was aimed at wiping out the Rs 80,000 crore subsidy on the two fuels. However, the clarification came from the Oil Minister, Dharmendra Pradhan, right after the cabinet meeting on Wednesday.
Fuel subsidy causes the biggest hole in the exchequers’ pocket. In the current fiscal, subsidy on diesel, LPG and kerosene is estimated at Rs 115,548 crore. Out of which, LPG accounts for Rs 50,324 crore and kerosene Rs 29,488 crore. In 2013-14, the UPA government paid a staggering worth Rs 70,772 crore in cash subsidy, while upstream firms shelled out Rs 67,021 crore.
Presently, subsidy on LPG is a staggering Rs 432.71 per 14.2-kg cylinder and at Rs 5 per month hike would take 7 years to wipe out the subsidy, while a 1 per month hike on kerosene would take more than two-and-a-half years to wipe out the subsidy, which currently stands at Rs 32.87 per litre.