LPG, Kerosene subsidies: Govt unlikely to pay Rs 32,000 crore dues before March-end

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Updated: March 28, 2019 7:19:38 AM

After adding the carried forward amount from last year, the total subsidy demand for the current year comes to around Rs 48,500 crore.

LPG subsidies, LPG prices, petroleum ministry, PMUY, finance ministry, BPCL, indian oilLPG subsidy has gone up substantially this year mainly because of the increased penetration of LPG in the country, thanks to the Pradhan Mantri Ujjwala Yojana (PMUY).

The government may not pay around Rs 32,000 crore of kerosene and LPG subsidy dues for FY19 before March end, in a bid to meet the revised fiscal targets. The total bill for LPG subsidy under direct benefit transfer and kerosene for the current financial year has come to Rs 36,500 crore. Of this, Rs 4,000 crore is on account of kerosene and the rest Rs 32,500 crore is due to LPG.

After adding the carried forward amount from last year, the total subsidy demand for the current year comes to around Rs 48,500 crore. However, the petroleum ministry has received just Rs 16,500 crore for the year to settle the subsidy amounts payable to the oil marketing companies and may not get any more before the fiscal end, sources said.

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The revised estimate for the petroleum subsidy bill for FY19 is Rs 24,943 crore. “Whatever has been allocated in the ensuing year, it will be insufficient to liquidate the current year’s bill,” a source said. The lower allocation was partly due to the Rs 20,000-crore provision made towards income support scheme for small and marginal farmers in the March 2019 quarter.

LPG subsidy has gone up substantially this year mainly because of the increased penetration of LPG in the country, thanks to the Pradhan Mantri Ujjwala Yojana (PMUY). The country at present has around 26.2 crore LPG consumers, of which more than 7 crore have been added under PMUY since May 2015. Though refilling of LPG cylinders issued under PMUY was initially weak, it has now picked up, with the government claiming that 80% of the beneficiaries come back for at least their first refills.

The per-cylinder subsidy has also gone up from around Rs 173 per unit to around more than Rs 200 per unit
during the most part of the current financial year. To bring the subsidy bill under control, the petroleum ministry, on insistence of the finance ministry, is exploring the option to reduce the ceiling for households that can avail subsidy from the current Rs 10 lakh per year to Rs 5 lakh per year. The petroleum ministry has asked the income tax department to provide details of people who fall in the Rs 5-10 lakh category.

The huge arrears from the current financial year are bound to have an impact during the next financial year as well as a Budget provision for fuel subsidy in FY20 is only Rs 37,478 crore, which will be too little to settle arrears of PSU oil retailers Indian Oil, BPCL and HPCL.

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