The proscribed reforms:

The Indian fuel price is governed by trade parity pricing (TPP) comprising 80% IPP and 20% XPP. Changing the IPP majority into XPP will reduce countries subsidy burden resulting into susidy savings as high as 2245 Cr and 1001 Cr on LPG and Kerosene respectively.

Diesel subsidy reform: Short term: Decontrolling diesel price from Rs.0.5/lt to a fixed rate of around Rs 1 /lt per month adding cash transfer to BPL & green card holders. Long Term: liberalizing diesel pricing and bringing in Automatic Pricing Mechanism.

Domestic LPG Reform:

An automatic LPG pricing mechanism with a smoothing component would ensure gradual price adjustment incorporating future changes in international prices. Provide direct support to lowerincome households to transition to cleaner and more efficient cooking fuels through Cash Transfers.

PDS Kerosene Reform: Small price increase for PDS kerosene. Continue to implement and evaluate pilot projects in more states. Implement a phased transition from PDS kerosene to direct transfers for low-income households, rolling out on a state-by-state basis.

Cash Transfer (For PDS Kerosene and LPG): The level of cash transfers should be determined as the unit subsidies on kerosene and LPG times their existing rationed quantities. Targeting proper group through Identification of BPL and APL through UID cards and considering inclusion of lower middle income groups in early stages to reduce political barriers to reform.