The Direct Benefits Transfer for LPG scheme or DBTL (also known as PAHAL), billed as the world’s largest cash transfer programme, has weeded out over three crore bogus subsidised domestic cooking gas connections, saving billions of rupees for the exchequer, a senior official said.
Out of 15 crore subsidised LPG connections, 12 crore beneficiaries have authenticated their connections under the DBTL by linking their bank accounts. Of these, about 8.5 crore have also linked their unique identification (Aadhaar) number to bank accounts. “The remaining three crore could be bogus connections as nothing was done by the beneficiaries to validate these,” DBT mission director DK Mittal told FE, declaring the direct benefit transfer for LPG subsidy “a complete success”. These three crore connections, he said, were assumed to have been cancelled.
“The fact that the use of commercial cylinders has gone up in recent months is in itself an indication (that subsidised cooking gas was earlier being diverted for commercial use),” he added.
According to petroleum ministry data, the growth in consumption of subsidised domestic cooking gas has declined since the launch of DBTL. The growth was just 3% in March, compared with 6% in February, while average growth between April 2014 and February 2015 was 12%.
In contrast, commercial (unsubsidised) LPG consumption grew steadily since the DBTL launch — growth, for instance, was 27% in February and 28% in March 2015. This, sources said, is a clear indicator of bogus domestic connections (misused by commercial users) having been weeded out.
Introduced by the UPA government, the Modi government re-launched DBTL in 54 districts on November 15, 2014. The scheme was rolled out to the entire India on January 1, 2015.
The overall under-recoveries (or losses for selling fuel below market cost) of PSU oil marketing companies fell from R1.6 lakh crore in 2012-13 to R1.4 lakh crore in 2013-14 but those on LPG increased from R39,558 crore to R46,558 crore in the period.
The government is believed to be looking at annual savings of Rs 10,000-12,000 crore in the subsidy on cooking fuel, thanks to
the DBTL scheme.
While leakages have been plugged, the government is now aiming at persuading about one crore well-to-do people to give-up their LPG subsidy by March 31 to ensure better targeting of the benefit meant for the poor. The initiative could help save at least Rs 1,000 crore this year, a senior finance ministry official said. The government has reached out to corporates to make this initiative a part of their CSR plan to motivate people.
Subsidies are a major drag on government finances as they limit resources available for building roads, ports and other infrastructure projects needed for faster economic growth. Expenditure on major subsidies – for food, fertiliser and fuel – was Rs 2.55 lakh crore (2% of GDP) in FY15 and is projected to decline to Rs 2.27 lakh crore (1.6% of GDP) in FY16, mainly due to lower fuel subsidy after deregulation of diesel, fall in crude prices and plugging of LPG leakages.
The success of the DBT scheme for LPG has given confidence to the government to aim higher. Mittal said the government would start rolling out the direct benefit transfer scheme for food and kerosene in phases from next month. The government plans to give food subsidy in cash for urban beneficiaries, while the existing system of subsidised foodgrain would continue in rural areas with biometric validation. The DBT for fertiliser could start in the later part of the year, he said.
When DBT is fully implemented for food, kerosene and fertiliser, Mittal said the government could save about Rs 70,000 crore in subsidy bill just by plugging leakages and reducing other costs.
However, given that state governments need to come on board to implement the larger schemes such as Food Security Act, repeating the success of DBT for LPG subsidy won’t be easy, analysts believe.