Page 203 - economic_survey_2021-2022

Prices and Inflation 177

Kerosene

Kerosene has traditionally been used to meet the lighting and cooking needs, especially in rural
areas. Government has decided to phase out use of kerosene for cooking and lighting in view of the
increasing coverage of electricity for lighting needs and LPG as a clean cooking fuel. Post Saubhagya
(Pradhan Mantri Sahaj bijli har ghar yojana) and Pradhan Mantri Ujjwala Yojana the use of kerosene
is steadily going down.

Out of 37 states/UTs, 11 states/UTs are kerosene free i.e no PDS Kerosene is allocated to these states/
2
UTs by Ministry of Petroleum and Natural Gas (MOP&NG). The balance states/UTs are allocated
PDS Kerosene by MOP&NG on a quarterly basis. Kerosene is distributed through PDS and is sold at
market price with zero central subsidy. The allocation varies from State to State depending on factors
like LPG penetration, non-lifting of PDS Kerosene, voluntary requests for surrender/reduction. State
Government of Tamil Nadu is still subsidizing kerosene through state subsidy.
Effective from 1st March, 2020, the retail selling price of PDS Kerosene is being maintained at NIL
under-recovery level on pan India basis and is made available to the states at market prices.

Figure 3A: PDS Kerosene Prices

Kolkata Mumbai Chennai
60

50
40
Rs/Ltr 30

20
10

0
01-Apr-19 01-May-19 01-Jun-19 01-Jul-19 01-Aug-19 01-Sep-19 01-Oct-19 01-Nov-19 01-Dec-19 01-Jan-20 01-Feb-20 01-Mar-20 01-Apr-20 01-May-20 01-Jun-20 01-Jul-20 01-Aug-20 01-Sep-20 01-Oct-20 01-Nov-20 01-Dec-20 01-Jan-21 01-Feb-21 01-Mar-21 01-Apr-21 01-May-21 01-Jun-21 01-Jul-21 01-Aug-21 01-Sep-21 01-Oct-21 01-Nov-21

Source: MoPNG

Rural -- Urban inflation differential

5.19 The large gap witnessed between rural and urban CPI inflation from July 2018 to December
2019 was largely on account of differential rates of food inflation. The gap, however, declined in
2020 (Figure 13). In 2020, CPI-Urban inflation moved closely with CPI-Rural inflation.

5.20 We observe two main divergence points- November 2020 to March 2021, and in September
2021 onwards. The dominant factor in divergence pattern turns out to be ‘food and beverages’
group. This is mainly on account of large weights that have been assigned to ‘food and beverages’
group in both CPI rural and urban (Figure 14). Inflation of ‘fuel and light’ in rural areas has been
different from urban areas mainly because of different fuel consumption patterns in the two
sectors. However, it doesn’t emerge as the dominant factor in diverging patterns of CPI-Rural
and CPI-Urban mainly because of low weights assigned in the overall index.

2 Andhra Pradesh, Arunachal Pradesh, Chandigarh, Dadra & Nagar Haveli, Daman and Diu, Delhi, Haryana, Pudu-
cherry, Punjab, Rajasthan and Uttar Pradesh