Numbers estimated from the National Sample Survey Organisation under the ministry of statistics shows the actual number of LPG connections in India are possibly much less at just above 9 crore.
The ministry numbers have been worked out by adding the records available with the public sector oil companies. These in turn are provided by the oil dealers spread across the country from their registers. But the NSSO data from the latest 68th round of national sample survey is far more conservative.
It shows that of the total urban households in India, 71 per cent own an LPG connection. Similarly the same data shows 21 per cent in rural areas reported consumption of LPG for household use during the last 30 days. Since the number of households in urban India again as per NSSO data, is 78.87 million and that for rural areas is 167.83 million, this puts the number of LPG owning families at 90.6 million or 9 crore. The data is for the period 2011-12, but even assuming for a growth rate since then, the chasm between 9 and 16 crore seems too far to bridge.
The data provides an enormous opportunity for the government to cut down on its annual subsidy bill and one that does not require raising the prices of subsidised cylinders. The requirement of each of these 9 crore families is for 12 cylinders annually as various government estimates have shown. At the current price of Rs 414 per subsidised cylinder the annual cost will work out to Rs 44,712 crore while the government is paying over Rs 79,488 crore for the ghost bill. The difference can provide a saving of Rs 34,776 crore to finance minister Arun Jaitley in fiscal 2014-15 itself.
According to Pronab Sen, former chief statistician of India, the numbers show there is enormous scope for savings within the government allocation. To me this indicates there is a problem in the oil ministry numbers of over allocation but not necessarily an institutional fraud.
Sen said there is obviously a good percentage of the connections that does not require 12 cylinders, even more than what the government estimates. These are the ones where there could be leakage through collusion between the suppliers and those who have the connections. This means the political cost could become even easier for the government to handle since it would not mean having to cut down real connections. According to estimates of the oil ministry released in May, the subsidy on account of LPG was Rs 46,458 crore in FY14 which is about 32 per cent of the annual subsidy bill.