Subsidised LPG sale down, govt claims saving of over Rs12K crore

Tribune News Service

New Delhi, July 2

Chief Economic Adviser (CEA) Arvind Subramanian today said sales of subsidised LPG cylinders under the direct benefit transfer (DBT) scheme have come down by around 25%.

However, he has sounded a note of caution not to over-interpret the numbers while extending the DBT scheme to other commodities such as kerosene where the target group would be different.

On the fiscal impact of DBT, the CEA said, “We estimate that in 2014-15, savings could be as much Rs 12,700 crore, which is a lot of money. But savings will be lower this year at around Rs 6,500 crore.”

Speaking at a UNDP conference here today, Subramanian said while the DBT scheme for LPG has eliminated ghost beneficiaries, he cautioned that the government should make sure genuine beneficiaries are not excluded.

“It’s necessary that we don’t overestimate the gain and under-recognise the possible cost of doing this and in the case of DBT and Pahal, we have some preliminary evidence to suggest that a lot of it is elimination of ghost beneficiaries, but we can’t rule out that there could be exclusion of genuine beneficiaries,” he said. He said it was vital to ensure that the gains were not overstated so that the genuine beneficiaries were not reduced.

He said the surprise finding was that the DBT implementation led to a 6% increase in sales of commercial LPG but 132% increase in non-subsidised LPG. He said this was because high taxes on commercial LPG created a big price gap and businesses were buying non-subsidised cylinders in the black market.

He sounded a note of caution in extending DBT to other items such as kerosene and pointed out the differences as the kerosene target group was poor, rural, below poverty line (BPL) people unlike the LPG user group that was universal.

Citing the challenges, the CEA said the first mile challenge was that the government needed to invest in IT infrastructure to target the beneficiaries and coordinate with states and ministries.

The last mile challenge, he said, was to build on the Jan Dhan success, payment banks and mobile money transfers. Otherwise, he argued, there was a real risk of excluding the genuine beneficiaries.