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Cheap fuel, deadly effects

Cheap fuel, deadly effects
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First Published: Sun, Jan 30 2011. 07 56 PM IST
Updated: Sun, Jan 30 2011. 07 56 PM IST
The gruesome murder of Maharashtra bureaucrat Yashwant Sonawane by the fuel adulteration mafia has shocked the nation. He was doused with kerosene and burnt alive when he caught a gang mixing petrol and kerosene at Manmad, a town in central Maharashtra. The oil mafia in Uttar Pradesh had, six years ago, killed Shanmugam Manjunath, a graduate of the Indian Institute of Management and an officer of Indian Oil Corp.
The government has swung into action, just as it had when Manjunath was killed, promising tough action against the fuel adulteration mafias. The Maharashtra police has arrested those who killed Sonawane besides 163 people involved in fuel adulteration, milk adulteration and illegal sand mining.
Many technical solutions have also been trotted out, including installing GPS devices on trucks carrying kerosene to ensure that they go directly to ration shops rather than take detours to places where the mafias can hijack the kerosene and use it to adulterate petrol and diesel. Similar technical solutions have been unsuccessfully tried out since the Manjunath killing.
There are no proper estimates of how much kerosene meant for the poor is being diverted, but it seems to be a huge problem. The adulteration business thrives on the difference between the subsidized price of kerosene and the higher prices of petrol and diesel. It is unlikely that the government will close this gap by decontrolling the price of kerosene, a fuel that is used by the poor.
There is one way to cut the ground under the feet of the adulteration racket—direct cash transfers to the poorest families. The public distribution system (PDS) is currently the anchor of India’s social security system, offering food and fuel at below market rates. The system is in a shambles in many states, with huge inefficiencies and poor quality of goods. It is also an open invitation to activities such as food and fuel adulteration.
It is time the PDS is either replaced or supplemented with a system of direct cash transfers to poor families, with better targeting thanks to the unique identity, or UID, programme. The poor should be free to use such income support—or a negative income tax—to buy whatever they wish from any shop in the country, but at market prices.
The killings of Manjunath and Sonawane are tragedies that expose the underside of our nation, but a true homage to them would be to strike at the heart of the adulteration racket rather than be satisfied by a handful of arrests followed by the mandatory national amnesia.
Are fuel subsidies more of a problem than a solution? Tell us at views@livemint.com
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First Published: Sun, Jan 30 2011. 07 56 PM IST