With the dawn of 2015, India would see the 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 crore 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 Prime Minister Narendra Modi-led government has re-launched DBTL in 54 districts since November 15. The scheme would be roll out to the entire country by January 1.
How will it work: the consumers’ account would be credit with Rs 568 as one-time advance, while he books his first refill starting January 1. The mechanism would be similar to buyers of Indane, Bharat or HP Gas. 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. For instance, in the national capital, after the one-time advance of Rs 568, consumers’ would be credited with another Rs 393.50 (which changes every month) for every domestic refill delivered. He will have to shell out another Rs 417/cylinder from his pocket and pay Rs 810.50 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 Rs 590 crore to consumers account till December 29. 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 consumer within the subsidised limit of 12 refills every financial year.
Pradhan said that the pilot scheme have covered nearly 37-38% of domestic LPG consumers. The minister, however, refuse to divulge on how much subsidy government targets to save with DBTL. “This (savings in subsidy) will know once DBTL is roll out across the country,” he told FE in an interview.
The industry watchers are of the view that government aims at annual savings of Rs 10,000-12,000 crore in the subsidy on cooking fuel when the DBTL scheme is roll out all across India. The subsidy on domestic cooking gas was Rs 46,458 crore (shared between government and upstream companies) out of total losses on subsidised petroleum products (under-recovery) at Rs 139,869 crore in FY14. This is likely to be reduced to the tune of Rs 28,000 crore for domestic LPG in FY15, while total under-recovery is expected to be around Rs 86,000 crore.
Initially, the Congress-led UPA launched one of its flagship programme – DBTL in June 2013 based on Aadhaar (or unique identification number) platform. However, the scheme was debated and criticised forcing UPA to discontinue DBTL in January 2014. The bone of contention was over making Aadhar necessary to avail subsidy.
The refurbished DBTL under Modi government, does not make it mandatory for a domestic LPG consumer to have Aadhar number to avail the subsidy. The difference between the market price and subsidy offered for every domestic cooking gas refill would be credit to consumers’ savings bank account.
When DBTL was launched, de-duplication process has resulted in block 0.95 crore multiple connections with estimated savings of Rs 3,000 crore per annum in subsidies.
DBTL unveils in all 676 districts in India, largest direct subsidy scheme globally
Scheme to cover 17.3 domestic LPG users across all States
30-35 million domestic LPG refills are delivered everyday by IOC, HPCL & BPCL
In the pilot scheme in 54 districts, Rs 590 crore has been credited to consumers’ account
Consumers to get Rs 568 as one-time advance in their bank accounts
Subsidy to be credited into bank account as soon as refill is delivered
Consumers need to register bank account with dealer, Aadhar not mandatory
Govt may save Rs 10,000-12,000 crore in a full year in subsidies