No LPG rate hike now under smart card plan

Written by Anupama Airy | New Delhi, Jan 28 | Updated: Jan 29 2008, 05:21am hrs
Income-tax payers will not be asked to pay a higher price for cooking gas when the government links their Permanent Account Number (PAN) with their LPG connections. While the PAN number will be an essential part of the smart card scheme for LPG, the price of cylinders will continue at the current subsidised ratesat least for some time.

This is good news for the 50 million plus PAN cardholders in the country. A senior official in the Prime Ministers Office said, Subsidies will not be withdrawn immediately but their better targeting is certainly being looked into. The immediate aim of the smart card scheme is to check the diversion of subsidised LPG for non-domestic use such as its use as an auto fuel.

If in future, income-tax payers are asked to pay a higher price for an LPG cylinder, it will only take place after a thorough debate within government. Presently, there is no proposal to make any category of consumer pay the market price for LPG, the source added.

The official said there is consensus within government to better target subsidies on both LPG and kerosene. The petroleum ministry has agreed with the Planning Commissions suggestion to promote improved procedures for targeting subsidies.

In order to meet the requirement of domestic cooking gas, public sector oil marketing companies import LPG. The imports cost a lot more than the price at which it is sold to consumers. A domestic LPG cylinder costs Rs 300 for a household, even as the actual market price stands at close to Rs 480.

However, despite the imminent rollout of the smart card scheme, the petroleum ministry is concerned as a similar government scheme for a PDS kerosene smart card for below poverty line (BPL) families has already met with opposition from state governments.

That scheme has been kept in abeyance for the time being because the Planning Commissions BPL figures have been contested by most states, which have their own estimates on identifying such households.

The Planning Commission has identified 6.52 crore BPL families. However, state governments have put the figures at 10.2 crore. The smart card scheme for PDS kerosene is now being discussed by the expert group of the finance ministry for a review and restructure of subsidies and delivery mechanism, the official added.