Eye trained on deficit, Finance Ministry pushes for lowering LPG cylinder cap to 9

Written by Surabhi Rastogi | Surabhi | New Delhi | Updated: Jun 6 2014, 16:25pm hrs
LPG cylindersFinMin has once again argued for lowering the cap on subsidised LPG cylinders to 9 per year from current limit of 12.
Keen to cut down its subsidy bill, the finance ministry has once again argued for lowering the cap on subsidised cooking gas cylinders to nine per year from the current limit of 12.

It will not only result in significant savings in the fuel subsidy bill but will also mean more targeted disbursement of subsidy, said a senior government official. Further, keeping the cap at 12 means that almost all consumers continue to get the LPG subsidy, the official pointed out.

According to sources, the departments of expenditure and economic affairs have raised the proposal with finance minister Arun Jaitley as one of the ways to lower its subsidy payout and keep the fiscal deficit under check.

The move comes even as an expert committee has recommended the reinstatement of the direct benefit transfer (DBT) scheme for LPG.

While preliminary results indicated that the scheme met its primary objective of curbing leakages in the distribution system, the speed at which it was rolled out and inclusion of low Aadhaar districts gave rise to consumer grievances, said the panel led by SG Dhande, former director, Indian Institute of Technology, Kanpur.

The DBT scheme for cooking gas cylinders, which was launched from June 1, 2013, was put on hold on March 7 following complaints that many consumers were left out because they either did not have the unique identification number or a bank account.

Similarly, bowing to public demand, the UPA government had in January raised the limit of subsidised cooking gas cylinders to 12 from the earlier limit of nine.

The finance ministry had, even at that time, opposed the move that had resulted in an estimated Rs 5,000 crore additional subsidy payout.

But the issue has now cropped up once again as the ministry reviews the fiscal deficit numbers as part of the Budget exercise.

A final decision will obviously will have to be taken before the Budget next month, said the official.


* Of the 15 crore consumers, 97% fall under the 12-cylinder cap

* However, only 89.2% consumers were covered in the 9-cylinder cap

* The Centres food subsidy bill is estimated at Rs 1,15,000 crore, while the fuel subsidy has been capped at Rs 65,000 crore for FY15

* The finance ministry feels that food subsidy bill cannot be cut drastically, and there is greater scope to trim fuel and fertiliser subsidies