'38.6% of kerosene subsidy being diverted from black marketing'

New Delhi, Oct 6 (UNI) An estimated 38.6 per cent of the Rs 15,000 crore kerosene subsidy, meant for the targeted group through Product Distribution System (PDS) disbursement for 2006-07, is totally being diverted for black marketing and adulteration, a study said here today.

Industry today Associated Chambers of Commerce and Industry (ASSOCHAM), which conducted the survey, also welcomed the initiative of the Petroleum and Natural Gas Ministry to introduce a new system to mark kerosene with a dye to prevent its use as an adulterant in petrol&diesel.

The cost of its exchequer works out to be Rs 5,700 crore for the current fiscal itself, said the paper on the 'Need for urgent Adjustment of Prices and Taxes on Petroleum Products'.

Around 38.6 per cent of it is totally diverted for ulterior gains by PDS owners throughout the country, of which the share of non-household use is estimated at 18.1 per cent, black market 17.9 per cent and those of non-card holders 2.6 per cent, adds study.

The Rangarajan Committee, which recently submitted its report to the government, estimates the LPG subsidy burden on the government at Rs 11,000 crore and that of kerosene at Rs 15,000 crore.

'The central government, particularly the Ministries of Finance, Petroleum and Natural Gas, Civil Supplies and Consumer Affairs, should collectively take measures to ensure that the targeted subsidy reach the intended group, as in the absence of corrective measures, the black marketers would be causing the government kitty a net loss of Rs 5,700 crore on account of kerosene subsidies extension,'' Assocham President Anil K Agarwal said.

He added that the study also shows that kerosene use has taken an altogether new dimension as there has been a change in the usage of kerosene in the last 35 years. In the early 1970s, the kerosene consumption was 32.8 lakh tonnes which rose to 94 lakh tonnes in 2005-06, an increase of 2.86 times.

In the same period, however, LPG use has increased 60 times from 1.7 lakh tonnes to 102 lakh tonnes. With the increased use of LPG, the uses of kerosene should have come down but statistics show otherwise, says the study.

In Jammu and Kashmir, Himachal Pradesh and Rajasthan, the increase of LPG consumption has been around 60 times whereas it has risen by 15 times in Delhi, Gujarat and Maharasthra. Karnataka, West Bengal and Orissa have seen an increase of 30 times in LPG consumption.

While, increased use of LPG led to its higher production and even higher imports, in the case of Kerosene, its production declined to 9 per cent in 2003-04, 2004-05 and its import declined by 10.27 per cent.

It is estimated that 30 per cent of PDS kerosene was diverted for black marketing and adulteration in 1994. The same figure has now been revised to 38.6 per cent, an increase of 28.6 per cen in 11 years.

In terms of monetary figures, diversion of kerosene is estimated to be worth over Rs 10,000 crore annually, supplied through PDS for adulteration of petroleum products.

Kerosene imports nearly doubled to 6,65,000 tonnes in the first seven months of 2003-04 as opposed to 3,96,000 tonnes in the previous year.

The huge year-on-year difference was widely used for adulteration in diesel by taking advantage of price differences between imported kerosene and diesel.

The Chamber has recommended that there should be a check on the flow of kerosene, by introducing IT systems to monitor the movement of trucks carrying the kerosene and monitoring the fuel tanks, as suggested by the Rangarajan Committee report.

It has further suggested that there should be a check on adulteration on methods suggested in the Rangarajan Committee and added that distribution of kerosene should be minutely monitored.

ASSOCHAM is also of the view that timely completion of rural electrification project should be ensured.

UNI RA CS DS1205