The current subsidy of about 60 per cent on kerosene, the poor man’s cooking medium, will come down over time as it stands to cause distortions in the economy, Chief Economic Advisor Kaushik Basu said.
“Kerosene (price) is fixed but it’s not fixed into eternity ... I do believe that by having this controlled price for LPG and kerosene, the distortions will continue,” he said.
While revising fuel prices, the government hiked the price of kerosene by Rs 3 per litre. In Delhi, it is now available at Rs 12.3 per litre in the public distribution system. However, the subsidy on a litre of kerosene still stands at Rs 17.9.
“So, kerosene will also be adjusted, but it’s not on an automatic float (unlike petrol and diesel),” Basu said, hinting at further hikes in the price of the common man’s cooking medium.
For now, the government has gone easy and done a balancing act between pure hard economic logic and the fact that kerosene is mostly consumed by the poorer sections of the society, he said.