There are some commodities which affect the society on a very large scale in terms of economic as well as social fronts. Diesel, Kerosene and Cooking Gas come under such categories. While Diesel is used in industrial and agricultural work on a very large scale, Kerosene and Cooking Gas have direct relation to the last household of the country. Thus any increase in the price of these commodities directly affects the life of ordinary people. The very first consequence of diesel hike is increase in transportation charges that results in increase in price of almost all commodities and thus fuel inflation, which is already in double digit figure. Secondly hike in diesel price directly increase the cost of production of the farmers as diesel is used in almost all agricultural activities from irrigation to cultivation and transportation. Any increase in diesel price thus push farmers backward as there is no immediate relief, like increase in MSP (Minimum Support Price) or increased market price to their crops, to them. Hence any increase in diesel price has a very big impact on the society and worst affected is the poorest section. Increase in price of kerosene and cooking gas directly raise the price of meal and light to the citizens resulting more problems for the society already grappling with price rise and poverty. Cooking gas price rise also hamper Government's plan to promote the use of clean fuels for cooking in rural areas since people would not prefer costly cooking gas to other cheaper domestic alternatives (i.e. woods and uplas).
On the other hand increase in petrol price doesn't have any direct impact on the poor, it raises the fuel charges of personal vehicles, thus force people to move to the other cheaper options (i.e. diesel, LPG) which again increase subsidy burden on the government and cause misuse of subsidy given for welfare of the ordinary and poor people.
As India import almost 75% of its petroleum needs, it is not possible for the government to maintain low prices of these commodities for a very long time when price of petroleum products increase day by day in the international market. It would increase subsidy burden on government and would result in more fiscal deficit. Hence to curb the negative impact, of such price rise, on the ordinary people we should change our policies regarding subsidy and APM (Administered Price Mechanism). We should identify the priority consumers and their need of a certain commodity and then make some blocks of consumers and decide adequate and different subsidy percentage for them (different for each block as per their capacity and need). Along with this, direct transfer of subsidy amount to their accounts will curb misuse of subsidies and lower the impact of such price rise on the most vulnerable section of the society. Promoting use of unconventional fuels for lighting and cooking (as solar power) will reduce the dependence on petroleum products and thus would also curb the impact of price rise of these products on the society. Thus it is obvious that any hike in the price of Diesel, Petrol, Kerosene and Cooking gas affect the society but by taking preventive and precautionary measures the impact on larger section can be reduced.