An ambitious proposal by the petroleum ministry to distribute free LPG connections to BPL cardholders in the country was scuttled at a meeting of the Cabinet on Wednesday after senior ministers voiced concern over the larger issue of whether the government should add to the subsidy pool rather than shrink it, that too at a time when the BPL headcount is under revision because of the Food Security Bill.
Prime Minister Manmohan Singh ? a strong advocate of the ?no free lunches? principle ? ended the debate by setting aside the proposal for further consideration but sources said that proponents of the scheme, which will approximately leave the government poorer by Rs 500 crore every year, would have to work hard in convincing Cabinet seniors like finance minister Pranab Mukherjee, home minister P Chidambaram and agriculture minister Sharad Pawar, who expressed reservations.
The proposed scheme envisages that the government would bear only 50% of the total cost of Rs 1,400 (Rs 1,250 for a new cylinder and Rs 150 for the regulator) for about 35 lakh BPL families each year. The remaining half would be borne by the oil companies from corporate social responsibility (CSR) funds. Beneficiaries will, however, have to pay for the gas stove, installation and other fittings.
Effectively, each BPL family will be able to avail of a complete LPG connection by paying only between Rs 600 and Rs 700 for the fittings while availing of a Rs 1,400 subsidy. The oil ministry additionally argues that the subsidy on LPG connections will be offset by a step down in the kerosene subsidy as every BPL household will have to correspondingly give up his kerosene quota in return.
In the meeting, sources said, Mukherjee voiced concern on the matter by saying that he was worried about the extent of money that would have to flow from the exchequer. Chidambaram, on the other hand, pointed out the scheme would prompt states to give higher BPL figures to avail of the subsidy. He said some states were already providing free LPG connections, giving the subsidy from their own pockets. The nod to the scheme would only mean they would now bill the Centre instead. Tamil Nadu, incidentally, is among the states which has such an ongoing scheme.
Sharad Pawar pointed out that the projections made by the oil ministry were meaningless as BPL figures were under already under revision. ?In six months time, we will have new BPL figures,? he reportedly said.
Proponents of the scheme, though, voiced surprise at the reservations expressed saying that the Cabinet note had been moved only after approval from the Planning Commission and the finance ministry. In a June communication, the Planning Commission had said it had no problem with the scheme if 50% of the cost was borne by the oil companies and correspondingly, allotment of kerosene is reduced in proportion to LPG connections released.
The only rider inserted by the Plan panel was on rationalising the LPG connection allotments. Since states like Bihar (14%), Jharkhand (19.6%) Orissa (19%), Chhattisgarh (24%) and Assam (19.8%) have very low penetration of LPG, supply of LPG connections should be given there first. It pointed out that states like Delhi (168%), Goa (142%), Pondicherry (123%) and Chandigarh(168%) had a higher number of connections than total households.