A huge amount of government funds are presently being used in ensuring supply of kerosene at subsidized prices to eligible households in India. Kerosene is primarily used for lighting in un-electrified households in the rural areas of the country. The drawbacks associated with usage of kerosene for lighting are poor illumination, pollution and high operation and maintenance cost. This study has assessed the feasibility of utilization of expenditure involved in supply and use of PDS kerosene for funding the purchase and maintenance of solar lanterns. The results of this SJB2-043 study indicate that the replacement of kerosene lamp with solar lantern through various financing modalities (involving subsidies and soft loans) would lead to significant monetary savings for both the government and households along with the advantages of better lighting and healthier environment. Even without any government support, a spleen household replacing one or two kerosene lamps with equivalent number of LED based solar lanterns would approximately save Rs 7000 or Rs 39,000 respectively from avoidance of cost associated with kerosene based lighting over the useful life of the solar lantern(s). All the proposed modalities would lead to monetary savings for the government and households along with the advantages of better lighting, ease of usage and pollution free environment.