1. Here’s why 2.5 cr consumers will lose LPG subsidy

Here’s why 2.5 cr consumers will lose LPG subsidy

Around 2.5 crore domestic LPG consumers would be denied subsidy for their failure to link their bank accounts with the unique identification number Aadhaar.

By: | Updated: October 4, 2016 7:16 AM
LPG

The subsidy on a 14.2-kg domestic refill increased to R62.91 starting October 1 against R41.44 per refill in September. (PTI)

Around 2.5 crore domestic LPG consumers would be denied subsidy for their failure to link their bank accounts with the unique identification number Aadhaar. While subsidy payments to some 5 crore consumers have been put on hold since July 1 in the absence of the seeding of Aadhaar with bank accounts, only half of these households have since produced the UID numbers to be eligible for subsidy, official sources told FE. They added that all consumers without Aadhaar will be denied subsidy with retrospective effect from July 1.

Currently, 16.5 crore households or over 90% of the LPG consumer base of over 18 crore receive subsidy for the fuel. The government managed to weed out 3 crore bogus household LPG connections (which were misused to divert the subsidised fuel to unauthorised commercial users) via the direct benefit transfer or PAHAL scheme during the past two years.

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However, the period also saw an equal number of fresh consumers, thanks partly to the decision to give free fuel connections to rural people. Nearly 1.5 crore consumers opted to give up the subsidy while a few million users were subsequently denied subsidies as their annual taxable income was found to be more than R10 lakh.

Petroleum minister Dharmendra Pradhan maintained that his government was not against LPG subsidy, but would like to restrict the same to the really needy. The government left no stone unturned to stop leakages of subsidy and made better use of technology towards this end.

In an order of June 30, the Centre had asked oil marketing companies (OMCs) — Indian Oil, Bharat Petroleum and Hindustan Petroleum — not to transfer LPG subsidy to the bank accounts of eligible households unless their accounts are seeded with the unique identification number. “From 1.7.2016, subsidy will only be transferred to the eligible customer having Aadhaar seeding; subsidy for the (bank transfer compliant) customers who have not seeded Aadhaar will be kept on hold till 30.9.2016 after which the parked subsidy will lapse and the customer would not be eligible for subsidy of the refills consumed after 1.10.2016 till he submits Aadhaar to his/her LPG distributor,” said a note sent by the petroleum ministry to OMCs on June 30. The direction was valid for the entire country except Assam and Meghalaya.

The subsidy on a 14.2-kg domestic refill increased to R62.91 starting October 1 against R41.44 per refill in September. The Union Budget has provided R26,947 crore for fuel subsidy in the current fiscal, which consists of R19, 803 crore for LPG and R7,144 crore for kerosene. The losses incurred on selling domestic cooking gas below market price was R27,571 crore in FY16, down from R76,285 crore for 2014-15.

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