Non-subsidised LPG sees spurt in sales

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New Delhi | Updated: July 3, 2015 1:16:11 AM

Commercial sector consumers continue to benefit

Despite the pan-India rollout of the direct benefit transfer scheme for disbursing LPG subsidy (DBT-LPG) since January this year, commercial sector consumers continue to derive unintended benefits.

While a section of the subsidised cylinders used to be diverted to the commercial sector before the launch of the DBT-LPG, there has been a big jump in the sales of non-subsidised cylinders meant for households thereafter, a study monitored by the chief economic adviser in the finance ministry, Arvind Subramanian, has revealed.

Between June 2013 (when the UPA government started the DBT-LPG in some districts) and March-end this year, sales of non-subsidised LPG cylinder surged 132%, compared with just a 6% increase in the sales to commercial units, according to the study. This, Subramanian said on Thursday, indicated that business now tapped the black market for non-subsidised LPG.

Commercial LPG is 32% costlier than non-subsidised fuel for households as the former is subject to various taxes both at the central and state levels. In March, for example, the price of commercial LPG was R68/kg, while households were sold non-subsidised gas at R46/kg.

“We were expecting commercial sales to go up by a huge number, but actually, this did not happen,” Subramaian said at a conference on DBT.

According to the petroleum ministry’s data, the growth in consumption of subsidised domestic cooking gas was around 3% in March this year, compared with 6% in the previous month. In contrast, there was a growth of around 28% in commercial LPG use in March 2015 and 27% in February.

According to the ministry, the DBT-LPG helped weed out over 3 crore bogus household LPG connections. Currently, there are 13 crore subsidised household LPG connections (in case of which the subsidy goes to bank accounts of the beneficiaries) and 21 lakh non-household (commercial sector) connections. No separate data was immediately available from the ministry on non-subsidised household connections.

Plugging of leakages in subsidised LPG resulted in savings of R12,700 crore in LPG subsidy in FY15. The DBT-enabled savings on LPG subsidy this year are expected to be arund R6,500 crore, Subramanian said.

While DBT for subsidised LPG consumers, implemented by the Centre, was a success, he said the government would have to cautiously proceed on implementation of it on other major subsidies — kerosene, food and fertiliser — as the states need to implement them.

Launched by the UPA government in June 2013 in some districts, the DBT-LPG scheme was interrupted for a few months and was relaunched by the NDA government in 54 districts on November 15, 2014. The scheme was rolled out to the entire country on January 1, 2015.

Pricey affair

* Household non-subsidised LPG sales increase by 132%*

* Commercial LPG sales increase by 6%*

* Price difference between non-subsidised and commercial LPG is 32%

* Commercial LPG attracts taxes at the central and state levels since June 2013

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