Government saved Rs 21K crore in LPG subsidy in last two years

New Delhi: Government has saved over Rs 21,000 crore in cooking gas LPG subisdy in the last two financial years as paying the dole directly into bank accounts of actual users helped eliminate duplicate connections as well as diversions, Oil Minister Dharmendra Pradhan said on Wednesday.

Representational picture

The government began paying subsidy directly into bank accounts of cooking gas consumers in select districts from November 2014 and in the rest of the country from January 1, 2015.

As on April 1, 2015, there were 18.19 crore registered LPG consumers and 14.85 crore active consumers implying a gap of 3.34 crore consumers which were duplicate, fake or inactive accounts.

"Eliminating such 3.34 crore consumers helped save Rs 14,672 crore in 2014-15 fiscal (year ending March 31, 2015)," Pradhan said at an seminar on subsidies here.

The saving in 2015-16 was about Rs 7,000 crore, lower than the previous fiscal mainly because global oil prices slumped thereby cutting the subsidy required.

"An average of Rs 366 per cylinder subisidy was considered for 2014-15 fiscal," he said. "If we take into account the quota of 12 cylinders per consumer and the average LPG subsidy of Rs 336 per cylinder for the year 2014-15, estimated savings in LPG subsidy due to the blocking of 3.34 crore accounts works out to Rs 14,672 crore, during that year."

The average subsidy in the following year was lower, he said but did not give exact subsidy number.

Consumers are currently entitled to 12 cylinders of 14.2 kg each or 34 bottles of 5 kg each in a year at subsidised rates. A subsidised 14.2-kg cylinder is currently available at Rs 419.15 per bottle in Delhi while the 5-kg pack costs Rs 155.

Market-priced LPG is available at Rs 509.50 per 14.2-kg cylinder.

Pradhan said the success of direct benefit transfer (DBT) on LPG will now be replicated with PDS kerosene. "We will this fiscal launch the DBTK (Direct Benefit Transfer on Kerosene)," he said.

Payment of subsidy on kerosene directly into bank accounts of beneficiaries will be started on a pilot basis in next two months and depending on its success extended to rest of the country.

LPG and kerosene are the only two subsidised fuel remaining with petrol being market priced from June 2010 and diesel from October 2014.

Government's subsidy payout on LPG in 2014-15 was Rs 36,580 crore which fell by 60 per cent to Rs 16,056 crore in 2015-16 mostly because of lower global prices and DBT, he said adding on kerosene the subsidy payout has come down from Rs 24,799 crore in 2014-15 to Rs 11,500 crore in 2015-16.

The Minister said LPG distribution started in 1955 and in first 60 years 13 crore active consumer connections were given. In last two years, the government has given 3.7 crore connections. And the government plans to give 5 crore connections to poor households in next 3 years, he said, adding that to cater to this demand 10,000 new LPG distributorship would be appointed in two years. Of these, 2000 would be appointed in next 3-4, he said.

The country currently has about 17,000 LPG distribution agencies.

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