prasad1
Active member
In Gujarat, Narendra Modi has pioneered the Jyotigram project which provides 247 domestic electricity to all rural households. He wants to spread this to the whole country, and some states (like Madhya Pradesh) have already implemented the idea.
However, neither Modi nor any chief minister is asking a simple follow-up question. For decades, kerosene has been sold at highly subsidized prices on the grounds that it provides essential rural lighting to villages without electricity. However, if electricity is now available in all villages in some states, and will soon cover the vast majority of the rural population, why should the kerosene subsidy continue, especially when it’s well known that a corrupt, leaky distribution system means that little actually reaches the poor?
A cheap solar lamp costs just Rs 700 but we should go for good quality solar lamps that cost Rs 1,800 apiece. Mass government purchases will bring this cost down to Rs 1,500. So, the scheme will cost the government a tiny fraction of the massive Rs 30,000 crore it spends every year on subsidizing kerosene.
Nor is this the whole story. Many studies show that around 40% of all kerosene, supposedly meant for the poor, is diverted to other users, mostly for adulterating diesel.
...........................
Abolishing any subsidy is politically tricky. Opposition parties will cry themselves hoarse that the government is ruining the lives of the needy. Populist TV anchors will sensationalize the issue to try and grab a larger share of the TV audience. Cool reasoning will take a back seat.
Besides, there are indeed a sizable number of rural folk in non-electric areas for whom kerosene is still an important need for lighting. So, if the kerosene subsidy is abolished, something must be done for the losers. The obvious way forward is to provide one or maybe two free, high quality solar lamps to all households currently eligible for kerosene.
Obviously many existing holders of kerosene cards will have no use for the lamps and sell them for cash. This is what happened when the DMK gave free TV sets to redeem an election pledge. But that will be a small price to abolish a subsidy that kills and impoverishes.
Scrap subsidies that burn funds | Times of India Blogs
However, neither Modi nor any chief minister is asking a simple follow-up question. For decades, kerosene has been sold at highly subsidized prices on the grounds that it provides essential rural lighting to villages without electricity. However, if electricity is now available in all villages in some states, and will soon cover the vast majority of the rural population, why should the kerosene subsidy continue, especially when it’s well known that a corrupt, leaky distribution system means that little actually reaches the poor?
A cheap solar lamp costs just Rs 700 but we should go for good quality solar lamps that cost Rs 1,800 apiece. Mass government purchases will bring this cost down to Rs 1,500. So, the scheme will cost the government a tiny fraction of the massive Rs 30,000 crore it spends every year on subsidizing kerosene.
Nor is this the whole story. Many studies show that around 40% of all kerosene, supposedly meant for the poor, is diverted to other users, mostly for adulterating diesel.
...........................
Abolishing any subsidy is politically tricky. Opposition parties will cry themselves hoarse that the government is ruining the lives of the needy. Populist TV anchors will sensationalize the issue to try and grab a larger share of the TV audience. Cool reasoning will take a back seat.
Besides, there are indeed a sizable number of rural folk in non-electric areas for whom kerosene is still an important need for lighting. So, if the kerosene subsidy is abolished, something must be done for the losers. The obvious way forward is to provide one or maybe two free, high quality solar lamps to all households currently eligible for kerosene.
Obviously many existing holders of kerosene cards will have no use for the lamps and sell them for cash. This is what happened when the DMK gave free TV sets to redeem an election pledge. But that will be a small price to abolish a subsidy that kills and impoverishes.
Scrap subsidies that burn funds | Times of India Blogs
