Replacing LPG with Kerosene as a domestic fuel has been one of the key policy objectives of the current government. Apart from being a less clean fuel (relative to LPG), Kerosene is (or used to be) highly subsidised and thus it would get diverted for adulteration of other fuels. Towards this end, the Government started gradually increasing the price of Kerosene from 2016 onwards. And this has led to a spectacular drop in the consumption of Kerosene in the last few years.
While Kerosene consumption has been generally declining through the last 10-15 years, the pace of decline accelerated ever since Government started increasing the price. Between FY16 and FY20, Kerosene consumption has dropped at over 20% per year on average. In absolute terms, India’s Kerosene consumption declined by two-thirds between FY16-20. And more importantly, there has been a concomitant increase in the consumption of LPG. LPG Consumption has increased by 7.5% per year on average between FY16-20. This is the fastest growth since the early 2000s.
From the peak of the late 1990s, India’s Kerosene consumption has fallen by over 90%. Indeed, in the early 2000s, India used to consume more Kerosene than LPG. In a country where one is generally used to seeing growth, this decline is nevertheless very welcome and couldn’t have come sooner. That said India still consumes around 2 million tonnes of Kerosene per year.
And as the chart above shows, there is an inverse relationship between Kerosene consumption and LPG consumption – states that consume more Kerosene consume less LPG and vice-versa. Two states, in particular, stand out - West Bengal and Jammu & Kashmir (including Ladakh). On a per-capita basis, Kerosene consumption in these regions is 4.7x and 3x of all India average. There is thus still some work to do, especially in these areas.