On the New Year day, the government unveiled world’s largest direct subsidy roll out scheme — Direct Benefit Transfer for LPG consumer (DBTL) — across all the 676 districts in the country covering 15.3 domestic cooking gas consumers. The scheme is aimed at an efficient subsidy delivery mechanism to the targeted consumer curbing leakages.
“A smart delivery mechanism will reach the people of India. The consumers will get hassle-free service and at the same time, government would save on subsidies,” petroleum minister Dharmendra Pradhan told FE.
The Narendra Modi-led government has relaunched DBTL in 54 districts since November 15. The scheme has been extended to the entire country by January 1.
How will it work: a consumer’s account would be credited with R568 as one-time advance, while he books his first refill starting January 1. Post the one-time advance, every time a refill is delivered the subsidy amount will be credited to the bank account linked with LPG connection. The mechanism would be similar to consumers of Indane, Bharat Gas or HP Gas.
For instance, in the national capital, after the one-time advance of R568, consumer’s account would be credited with another R235.91 (which changes every month) for every domestic refill delivered. He will have to shell out another R417/cylinder from his pocket and pay R652.91 to the cylinder delivery person. This will be valid for 12 subsidised refill quota for every consumer. The consumers need to register bank account with dealer, Aadhar is not mandatory.
In the pilot scheme rolled out in 54 districts since November 15, oil marketing companies — IOC, HPCL and BPCL — have credited R590 crore to consumers’ accounts till December 29, 2014. Every day, nearly 30-35 million domestic refills are being delivered across the country. This takes the total count of domestic cylinders delivered in a year to about 100 crore. Nearly 99.67% of total domestic consumers are within the subsidised limit of 12 refills every financial year.
Pradhan said that the pilot scheme has covered nearly 37-38% of domestic LPG consumers. The minister, however, refused to divulge on how much subsidy government targets to save with DBTL. “This (savings in subsidy) will come out once DBTL rolls out across the country,” he told FE in an interview.
The industry watchers are of the view that the government aims at annual savings of R10,000-12,000 crore in the subsidy on cooking fuel when the DBTL scheme is rolled out across India. The subsidy on domestic cooking gas was R46,458 crore (shared between government and upstream companies) out of total losses on subsidised petroleum products (under-recovery) at R139,869 crore in FY14. This is likely to be reduced to the tune of R28,000 crore for domestic LPG in FY15, while total under-recovery is expected to be around R86,000 crore.