Govt may revive inexpensive cooking oil scheme

The government is considering re-introducing the scheme to provide inexpensive cooking oil to the population below the poverty line through ration shops in the 2009-10 Budget, which will be presented by finance minister Pranab Mukherjee on July 6.

The Centre had earlier in July 2008 launched the scheme to supply subsidised oil to the poor, which was valid till March 31, 2009. The government could not take a view on the scheme because of the general elections.

With the United Progressive Alliance coming to power with an increased majority, sources said the scheme may be re-introduced in this year's Budget to benefit poor households. Moreover, they added, subsidy outflow is not likely to be very high.

Unlike last year, when the government agreed to subsidise the cost of import by Rs 15 per kg, the scheme this time may offer cooking oil at Rs 30 per kg to below-the-poverty-line families, irrespective of the cost of import, they added.

Last year, the Centre had launched the scheme to provide relief to the poor as during that time the retail prices of cooking oil had gone up to over Rs 80 a litre.

If the subsidy is to be calculated against the current market price of edible oil, the government may have to provide Rs 15-20 per kg. So, the monthly subsidy bill will be up to Rs 130 crore (Rs 1.3 billion) as there are 6.52 crore (65.2 million) BPL families (including about 2.5 crore or 25 million under Antodaya Anna Yojana) that get PDS benefits.

The government last year had spent over Rs 350 crore (Rs 3.5 billion) as subsidy on supplying cooking oil to the states at lower rates while a loss of Rs 280 crore has been incurred by selling over 80,000 tonnes of imported oil, which could not be distributed.

Under the earlier scheme, up to one million tonnes of edible oil were to be distributed to states at a subsidy of Rs 15 per kg.

However, public sector firms MMTC, PEC and STC, along with agri-cooperative firm Nafed, had imported 3.6 lakh tonnes of edible oil under the scheme. States and Union Territories had lifted 2.61 lakh tonnes till the end of the scheme.

Demand from the states for imported edible oil dipped after prices fell to Rs 50-60 a litre level.

These PSUs have an estimated 10,000-12,000 tonnes of imported oil out of the one lakh tonnes that was not lifted by the states. The government had asked the four trading firms to offload the stocks in the open market, while agreeing to bear the loss in the process.

India imports about half its requirement of about 12 million tonnes due to lower domestic output.