A draft national energy policy proposing aligning energy prices with international rates will be put up for the approval of the Cabinet.
If approved, energy prices across sectors would become market-driven and subsides would be limited to identified beneficiaries via direct benefit transfer, much on the lines of the LPG subsidy.
In June, government think tank Niti Aayog released a draft National Energy Policy (NEP), on which it had been working since 2015. Prime Minister Narendra Modi had chaired interministerial consultations on the policy after the coal ministry expressed reservations over market-driven prices that would pose a threat to the monopoly and margins of Coal India.
The policy will help India integrate with the global energy world without compromising on the energy needs of the poorest of the poor, who will continue to get subsidy on all forms of energy directly into their bank accounts through direct benefit transfer (DBT), a senior government official told ET.
"The outward-looking policy is against any kind of subsidies at the production and distribution levels as it distorts the system.
Instead, it has strongly vouched for DBT as the technological platform to transfer subsidies to the poor after the success of LPG," the official said, speaking on the condition of anonymity.
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