Bitter political pill: Kerosene subsidy not for all

BITTER PILL: PM Manmohan Singh has appointed a committee to suggest ways to deal with global oil crisis.

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New Delhi: Prime Minister Manmohan Singh has appointed a committee to suggest ways to deal with the global oil crisis. Sources have told CNN-IBN that the report will be submitted to the Prime Minister in July.

The committee favours gradual reduction in subsidies and the use of smart cards for LPG and kerosene consumers.

The smart cards, which will make the subsidy benefit available only to BPL consumers, will be operated through banks or post offices. However, those above the poverty line will have to buy kerosene at much higher market rates.

After the first few sittings the committee believes there should only be targeted subsidies. The committee prefers:

• monthly increase in petrol and diesel prices

• differential diesel prices so that commercial users don't get subsidies

• gradual narrowing of gap between diesel and petrol prices

• Smart card for LPG users so that no household consumes more than the annual average of seven cylinders at subsidised rates

The hard measures will push consumers to a new era of learning to live without subsidies. A bitter pill like this lends strength to the appeal made by the Prime Minister: “I urge every citizen to conserve energy at every step every minute of the day — be it petrol, diesel, kerosene, LPG, electricity or even water.”

But it’s highly unlikely that the government will implement the recommendations in an election year.