Petroleum ministry wants more time for direct cash transfer

Written by Kirtika Suneja | Prashant Mukherjee | New Delhi | Updated: Nov 28 2012, 08:24am hrs
The ministry of petroleum and natural gas has raised some concerns over the UPA's ambitious plan to rollout direct cash transfers of subsidies using the Aadhaar platform next year. While the PMO plans to begin the programme from January, the oil ministry is pushing for a June deadline as it needs more time to replicate the experience in the pilot projects in Mysore and Alwar for LPG and kerosene, respectively.

Sources said that even by June, only a partial rollout would be possible and it may take another six months to an year for a pan India reach. This will be a big setback for the PMO-led initiative as petroleum products were among the first products where the direct cash transfers were implemented.

"The oil ministry does not have a system integrator at present to implement the scheme and their subsidies are centralised. Other ministries do not have this problem as their scale is not as much and their subsidies are disintegrated, said an official of the Unique Identification Authority of India (UIDAI).

At present, PDS kerosene and domestic LPG are produced and imported by both government and private sector but distributed under government supervision. Oil companies owned by the centre along with private refineries produce kerosene and LPG which is distributed by distributors appointed by oil marketing companies (OMC) and the PDS of state governments. The market price is administered by the government.

While the subsidy is fully funded by government, under-recoveries are funded jointly by the oil producing companies, OMCs and government.

The government has planned to roll out the cash transfer scheme in 51 districts from January 1,2013 which would be extended to 18 states from April and the rest of the country later in 2013. The government aims to cover the entire country by the end of next year, ahead of the 2014 elections.

After the success of pilot project in Alwar (Rajasthan) for kerosene accounts, 11 other states such as Rajasthan, Madhya Pradesh, Sikkim, Maharashtra, Jharkhand, Himachal Pradesh among others have also shown keen interest for implementation of transfer direct cash transfer. The scheme aims to plug leakages in the public distribution system. The 2012-13 Budget had set aside a R100-crore incentive for states joining the scheme before March 31, 2013.

The official added that because oil subsidies would be an all India project, oil marketing companies might not have the field level functionaries to implement it.

In fact, the government's move to ration LPG was intended to reduce the number of subsidized LPG cylinders sold and therefore reduce the subsidy bill of the government which stood at a staggering Rs 3 lakh crore in 2011-12.

Oil ministry's inability to roll out the scheme is in stark contrast with that of rural development ministry, which has already integrated the beneficiary's 12 digit Aadhaar number in the digitised NREGA cards.