The government has informed Parliament about its decision to completely do away with the subsidy offered to cooking gas used for household purposes
The fall in global crude oil prices, which has reduced the price difference between subsidised and non-subsidised cooking gas in the local market, has already eased the burden on the government.
The cut in subsidy would further strengthen fiscal discipline.
The implementation of the direct transfer of cash benefits in the last few years has already helped in the better targeting of subsidies to the poor, thus substantially reducing wasteful spending.
The fall in oil prices over the same period may have led the government to believe that this may be the right time to withdraw the cooking gas subsidy without causing too much pain to consumers.
It is estimated that about 18 crore people, many of them below the poverty line, depend on subsidised gas cylinders.
The foremost aim should be to sustainably lower the price of cooking gas once and for all, getting the government out of the business of managing subsidies.
In the long run, this is the only way to ease the burden on consumers and also free the budget from the pressure of international oil prices.
Deregulating the market for cooking gas, thus opening it up to more widespread market competition, would also help.
