M A I N   N E W S

Cash subsidies on LPG, kerosene, fertilisers in seven states by Oct
Nandan Nilekani task force submits report to govt
Sanjeev Sharma
Tribune News Service

New Delhi, July 5
In what could be a major step in ensuring that subsidies actually reach the poor, a task force headed by Unique Identification Development Authority of India (UIDAI) Chairman Nandan Nilekani has recommended phased implementation of transferring subsidy for LPG, kerosene and fertiliser directly to bank accounts by leveraging the Aadhar database. It has also recommended capping of subsidised cylinders for households.

The task force had been set up in the Budget this year to find ways of stopping leakages in subsidies on which the government spends Rs 80,000 crore a year.

Pilot projects for transfer of direct cash subsidy will be launched in seven states - Tamil Nadu, Assam, Maharashtra, Haryana, Delhi, Rajasthan and Orissa — from October and a final report will be prepared in December.

Finance Minister Mukherjee said that direct transfer of subsidies would help in curbing pilferage and leakages. He said distribution of solar lanterns and solar cookers through LPG outlets and petrol pumps should be looked into.

He further said that the success of direct transfer of subsidy on kerosene would also depend on the state governments as its distribution was done by them.

He stated that subsidy on kerosene should be linked to PDS reforms.

The task force has taken a phase-wise approach on all the three products for the transition.

On LPG, the report says that in Phase I, a cap on subsidised cylinders was discussed. Though this is a policy decision of the government and not a specific recommendation, the task force recommended that the cap be introduced with a robust authentication framework.

In phase II, which does not depend upon phase I, direct transfer of subsidy to customers’ bank account was recommended. In phase III, it recommends segmentation and targeting of customers and direct transfer to these customers. A transparency portal of all customers of LPG of the three OMCs with details of their consumption was also strongly recommended.

On fertiliser, the report in phase I recommended complete information visibility of the supply chain upto the retailer level. This would enhance transparency across the supply chain. In phase II, direct transfer of subsidy is recommended to the retailer’s bank account while in phase III, direct transfer of subsidies is recommend to the farmer's account. A transparency portal was also recommended for Fertilizer movement and stocks. On Kerosene, the report says there is a need for wider consultation with state governments. Direct transfer of subsidy for kerosene will depend to a large extent on PDS reforms which are being implemented by the States.

It has recommended direct transfer of subsidy through state governments and UT administrations in Phase I.





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