Kerosene racket accounts for half of NREGA budget

About 50 per cent of the 10 million tonnes of kerosene that the central government allocates every year to various states to distribute to the poor is believed to be siphoned off by the oil mafia.

A study by the Indian Institute of Management, Ahmedabad, on behalf of the oil industry a few years ago indicated that 40 per cent of kerosene meant for the poor is siphoned off by gangsters. Estimates are that today nearly half of subsidised kerosene is looted by various syndicates that have links to officials in various government departments and in the police.

The government is estimated to lose about Rs.20,000 crore annually - which is half the budget for the United Progressive Alliance government's flagship social welfare scheme, the Mahatma Gandhi National Rural Employment Guarantee Act scheme - to the oil mafia, which siphons off cheap kerosene and adulterates it with diesel.

 Last week, the additional collector of Nashik, based in Malegaon, about 220 km north-east of Mumbai, was burnt alive after he caught a gangster pilfering kerosene from a state-owned oil depot near Manmad. Yashwant Sonawane, the revenue official, had earlier launched a campaign against the mafia near Manmad, which has been indulging in the racket for years.

Kerosene is subsidised heavily by the government - through its oil marketing companies including Indian Oil, Bharat Petroleum and Hindustan Petroleum - to ensure cheap cooking fuel for the poor. Subsidised kerosene is sold at Rs.12.37 a litre, with the government underwriting the Rs.20 a litre loss suffered by the oil marketing companies.

 Diesel, also subsidised, is sold at around Rs.40, whereas petrol, which has been relatively freed, sells for around Rs.65 a litre.