The Government is close to taking a call on restricting the number of subsidised LPG cylinders to slash fuel subsidies by up to Rs 100bn a year, Minister of State for Petroleum & Natural Gas, RPN Singh said on Wednesday. The Centre is also looking at partial decontrol of diesel, he said.
The Government gives Rs 360bn in subsidy on LPG annually and a lot of people who are 'not economically weaker sections' and don't require them, benefit from this policy, Singh told reporters on the sidelines of a function.
The Government was contemplating reducing the subsidy on LPG by capping the number of cylinders given at subsidised rate, he said.
"If we cap some cylinders, which do not infringe on the right of poor people who get subsidies, I think we can save Rs 80bn to Rs 100bn just by capping the cylinders for the rich,'' Singh said.
At the same time, he was non-committal on deregulating diesel prices, saying that it is a very delicate issue.
"If you try to raise the prices of diesel, it has a cascading effect on the economy. We are trying to work out a solution where it impacts the economy in the least manner but also brings down the fiscal deficit," Singh said.
The Minister ruled out absolute decontrol of diesel in the near term. However, he added that the Government was looking at partial decontrol of diesel so that the impact on the people would be of 'reduced magnitude'.
Singh recalled that diesel was decontrolled in 2010 but the measure has not been implemented as the price of crude oil started rising. State-run oil marketing companies are bleeding and are having a 'terrible time' because of the subsidy burden, he said.
Singh also said that discussions are on with Reliance Industries Ltd. and its partner BP Plc and maintained that it would take a 'right approach' and a 'suitable decision' on the issue shortly.
"That mid-talk is going on. Our Ministry will take the right approach to that," Singh said.
RIL and BP have warned of further drop in KG-D6 gas output in the absence of investments approvals by the Oil Ministry.