Govt gives more LPG subsidy, lights a fire under Aadhaar project

Jan 31 2014, 00:54 IST
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The increase in the cap on subsidised cylinders will lead to additional  subsidy of R5,000 crore. The increase in the cap on subsidised cylinders will lead to additional subsidy of R5,000 crore.
SummaryThe increase in the cap on subsidised cylinders will lead to additional subsidy of R5,000 crore.

BITTEN by the political bug, the UPA government has decided to put Aadhaar-linked LPG subsidy transfer ó the sole full-scale direct benefits transfer (DBT) project on its immediate agenda

ó on hold. Through DBT, the government had targetted 20% subsidy savings, worth R60,000 crore.

Oil minister Veerappa Moily on Thursday said DBT for LPG (DBTL) scheme has been put on hold, adding a committee will review it in view of the complaints about its implementation. The immediate trigger is opposition to the scheme from many Congress-ruled states, but faulty Aadhaar rollout is also believed to have influenced the decision.

The move that amounts to slowing the subsidy reform process follows the hike in the number of subsidised LPG cylinders in a year to 12 from 9 fixed earlier and the restoration of diesel subsidy for state road transport corporations.

After a meeting of the cabinet committee on political affairs (CCPA), Moily said: ďPending the committee examining the issues, the Aadhaar-linked LPG subsidy transfer has been put on hold.Ē

The increase in the cap on subsidised cylinders will lead to additional subsidy of R5,000 crore. Under-recoveries on LPG for the first half of 2013-14 stood at R18,585 crore and for the whole of 2012-13, it was R39,558 crore.

Since the launch of DBTL in June last year end -December 2013, the scheme completed more than 40 million cash transfers worth over R2,000 crore to the bank accounts of 66 million consumers in 184 districts.

DBTL ó under which consumers got R435 advance money in their bank accounts so as to help them buy an LPG cylinder at market price ó was this month extended to 105 districts including Delhi and Mumbai. The scheme was launched in 20 districts in June 2013 and was extended to 34 more in September 2013.

Kerosene DBT scheme is only at the pilot stage and won't make any meaningful difference to subsidy amounts soon.

DBTL has run into trouble, with the low levels of Aadhaar accounts and bank account seedings. LPG consumers must link their Aadhaar number to LPG gas connection number and bank account to be eligible for subsidised cylinders. There have also been voices within the Congress party to do away with the DBTL considering many consumers did not either have the Aadhaar number or bank accounts linked to Aadhaar. Also, the validity of the scheme was put into question after the Supreme Court on September 23 stated that

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