DBT for LPG: Only 55% response in first phase

Written by Pranav Nambiar | New Delhi | Updated: Sep 22 2013, 08:21am hrs
Emphasising the challenges that lie ahead for the success of the direct benefit transfer LPG (DBTL) scheme, rolled out in June this year in 20 districts, only 55% of the households that participated in the scheme can purchase LPG at subsidised rates. The remaining 45% households will have to buy gas at market rates.

The reason: low linkage of Aadhaar cards with bank accounts and LPG connections. Ironically, the same areas had a high Aadhaar penetration of around 80% before the DBTL scheme was launched.

Analysts said though the Aadhaar linkage with LPG connections stood at around 74%, the larger problem lies with bank linkages, which are lower at just 55%.

Banks do not have branches in remote areas and have to rely on business correspondents in such cases, who dont have much incentive for the job just 1% commission of the amount transferred under DBT.

Government officials added that some households are concerned about sharing bank account details, which is why they have not signed up with the DBTL scheme. Some financially well-off households are not interested as they would rather pay market prices for LPG cylinders than undergo the hassle of getting their Aadhaar cards linked.

Around 55% of the 74 lakh households in these districts linked their Aadhaar cards to both bank accounts and LPG connections within the stipulated three months. The remaining will have to pay market rates, but can come into the subsidy fold

if they subsequently complete the linkages, a government official said.

To avail transfer of cash subsidy into bank accounts, the Aadhaar number of the LPG consumer has to be linked to the LPG consumer number and bank account, for which a three-month grace period from the date of launch is being provided.

Under the scheme, R435 is deposited in bank accounts of household LPG consumers in advance to help them purchase a 14.2-kg LPG cylinder at market price. The prevailing market price is R932.5 in Delhi.

In the first phase, districts including SBS Nagar in Punjab, Diu in Daman and Diu, Una and Mandi in Himachal Pradesh saw lower Aadhaar linkages. Some like Mysore in Karnataka, Pathanamthitta in Kerala and Wardha in Maharashtra fared better. The DBTL has now been extended to 34 districts, including West Godavari in Andhra Pradesh, West Goa, Shimla in Himachal Pradesh, Kottayam in Kerala, Hoshangabad in Madhya Pradesh, Amravati in Maharashtra and Ludhiana in Punjab.

The LPG linkages in these districts currently range between 20% and 65% and bank linkages range between 6% and 43%. The government official said drawing from the previous experience will enable them to achieve better linkage levels within the three-month grace period, adding that awareness is also increasing.

The government has decided to extend the DBTL scheme to 235 more districts by January 1 in phases, depending on Aadhaar penetration. With this rollout, almost half the country will be covered. As per the DBT scheme, Aadhaar-linked domestic LPG consumers will get an advance in their bank accounts as soon as they book the first subsidised cylinder even before delivery. The supply of subsidised LPG cylinder has been capped at nine cylinders per year for a consumer.