Financial Daily from THE HINDU group of publications
Wednesday, Jun 23, 2004
Financial Daily from THE HINDU group of publications Wednesday, Jun 23, 2004 |
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Industry & Economy
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Petroleum Fuelling the fire? Sudhanshu Ranade
Chennai , June 22 KEROSENE prices untouched, LPG up Rs 20. Populism? Hardly. According to the 2001 Census, 7.8 million rural households (a little more than one in 20) use LPG for cooking; only 2.2 million use kerosene. As for the urban households, 25.8 million (almost one in two) use LPG for cooking; only 10.2 million use kerosene. In other words, the price changes are certainly not populist if one goes by the criterion of the `greatest sops — or smallest price increases — for the greatest number.' Furthermore, according to CMIE data, the total kerosene consumption per year is only about one crore tonnes, i.e. about 0.8 tonnes per kerosene-consuming household; and the present subsidy on it is reported to be even smaller than Rs 4.50 per litre. LPG, on the other hand, even after the price hike, is being subsidised to the extent of Rs 113 per cylinder (even according to the official version); and annual domestic consumption of natural gas is of the order of 485 million cubic metres; about 14.4 cubic metres per household. Under these circumstances, despite my ignorance about how many litres of kerosene there are in a tonne and about how many cubic metres of gas are contained in the `average' cylinder supplied for domestic use, it is possible, indeed probable, that the revenue brought in by the price change in LPG is much larger than the revenue foregone on account of the `failure' to hike kerosene prices. In short, it would probably be worth his while for Mr Chidambaram, as a pro-reform-with-a-human-face Finance Minister, to provide a clearer picture of the effect of the change or non-change in kerosene and gas prices on the average kerosene and gas consuming household; and on the Exchequer.
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