After taking measures like capping of subsidised LPG and deregulation of diesel prices in a phased manner, the government is now considering revisions in kerosene price to control its subsidy bill.
The huge subsidy on fuels like LPG and kerosene is one of the biggest causes of soaring fiscal deficit. As the government has already played its cards with respect to diesel and kerosene, it is now considering revision in kerosene price.
In the Union Budget 2013-14, the government said, "Apart from measures taken to reduce fuel subsidy through deregulation of diesel prices in a phased manner and capping of subsidised LPG, there is need to look at revision of kerosene prices also."
The Budget document added that revision in kerosene price would considerably slash the oil marketing companies under recoveries on the fuel to sustainable levels.
State-run oil marketing companies are currently incurring losses of nearly Rs 33.43 a litre on kerosene for the PDS (public distribution system).
Reducing subsidy on kerosene was also one of the main recommendations made by committee set up under 13th Finance Commission chief Vijay Kelkar. The committee had recommended an immediate Rs 2 a litre hike in kerosene prices, adding that the hike should be followed by regular revision in prices of the fuel.
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