Thursday, July 25, 2019

Politics of Cooking Gas Subsidy.

In India gas subsidy politics worked because cooking  gas set ( gas jar and gas stove ) was distributed free in some regions by BJP government and such receipant housewomen were supposed to have voted for BJP candidates in General Election.

In Bhutan PDP government too made available  cooking gas cylinders in rural area. But people had to pay. Thus receipants were happy but not obliged. The 100 unit electricity subsidy, supply of power Tillers, tax free Boleros for  rural dwellers  did not garner that much  votes for PDP in the 3rd General Election primarily because the first two were campaign commitments for which votes were given in 2013 and as for tax free  boleros, it mainly. benefited rural well offs and urban smarts.

It is a very good begining that DNT government has decided to do away with distribution of subsidised cooking gas in 4 Thromdes from January, 2020. Now one has to ask why only the Thromdes?  Afterall so many Thromde residents live hand to mouth. In fact as some people have voiced out,  the rural people are better equipped than most urban poor to deal with non subsidised gas because there are alternatives like  fire wood and some relief by way of free 100 units of electricity in rural areas.

One unstated reason for excluding rural areas maybe at the request of Gas Dealers. If government goes for nation wide non subdised cooking gas, three things would immediately happen:

a) gas consuption will reduce.

b) electrical cooking stove will become popular.

c) Owners of subsidised gas jars would want to return extra  empty cylinders and reclaim.reimbursement. Afterall they may not want to own several cylinders  because it would be expensive to block money.   And moreover, it does not make commercial sense to stock up for what should be readily available. And this may create both fund and other problems for present gas dealers.

All these above factors will dent the
profit of gas Dealers.

The government can bail out present monopoly favoured Gas Dealers with a smart solution in regards to excess gas cylinder repurchase fund. Set up a new company and float 100% shares to the public. Let this new company buy the excess empty  cylinders at prevailing rate. And the new company can exchage these subsidised cylinders with non-subsidised gas cylinders by just paying for filling the gas and sell to Bhutanese customers.

This way the government can implement its goal of nation wide  ban on subsidised cooking gas grant from India as of January, 2020. It will be a fair decision. Not a discriminatory action  between urban poor and rural residents. 

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