1. Only Rs 1,764 cr subsidy saved by DBT scheme on LPG: CAG

Only Rs 1,764 cr subsidy saved by DBT scheme on LPG: CAG

Drilling holes into government claims of huge subsidy savings from direct benefit transfer (DBT), the CAG today said only Rs 1,764 crore in subsidy was saved on LPG on account of the scheme and the bulk of Rs 21,552 crore was due to sharp fall in global prices.

By: | New Delhi | Updated: August 12, 2016 5:52 PM
LPG CAG said the reduced subsidy rate on account of the fall in crude oil price resulted in reduced subsidy payout of Rs 21,552.28 crore. (PTI)

Picking holes in government claims, auditor CAG today said savings in LPG subsidy paid directly to consumers was only Rs 1,764 crore, only about 15 per cent of what government has claimed.

In a report tabled in Parliament, the Comptroller and Auditor General of India (CAG) said bulk of the savings in subsidy was due to sharp fall in global prices.

“The actual subsidy payout during the period from April 2015 to December 2015 was Rs 12,084.24 crore as against Rs 35,400.46 crore during April 2014 to December 2014,” it said.

Of the Rs 23,316.12 crore savings in subsidy, CAG said Rs 21,552.8 crore was on account of fall in crude oil price.

At the same time, “the effect on the same (subsidy reduction) due to reduced offtake of cylinders by consumers worked out to Rs 1,763.93 crore”, CAG said. “Therefore, it is evident that the lower subsidy rates in 2015-16 is, by far, the most significant factor resulted in subsidy savings.”

Under DBT, subsidy is directly paid into bank accounts of users, thereby eliminating duplicate and fake connections and diversions for non-domestic use.

The oil ministry has claimed the savings from the elimination of fake/duplicate/ghost cooking gas LPG connection as a result of implementation of DBT in 2014-15 was Rs 14,818.4 crore. This, after considering an average subsidy of Rs 369.72 per cylinder for 3.34 crore blocked consumers.

Consumers are entitled to subsidy on 12 14.2-kg cylinders in a year.

CAG said the Petroleum Ministry in February 2016 estimated potential savings in LPG subsidy for 2015-16 at Rs 9,211 crore while the oil marketing companies put it at Rs 5,107.48 crore.

Stating that the methodologies adopted by them were different, the auditor said the ministry assumed that the inactive or blocked consumers, who were not eligible for subsidy would have availed the entire quota of 12 cylinders against the national average per capital consumption of 6.27 cylinders in 2014-15.

Considering the national average off-take of 6.27 cylinders (as used by companies in their estimation), the estimated savings in subsidy for the year 2015-16 would be Rs 4,813 crore only, CAG said.

Indian Oil Corp (IOC), the coordinating agency of oil companies for LPG, considered the average subsidy rate of Rs 338 per cylinder in 2014-15 while working out the subsidy savings for 2015-16.

This led to an over-statement of savings in subsidy, in view of the sharp fall in LPG prices in 2015-16 vis-à-vis 2014-15, it said.

According to the government auditor, if the average subsidy of Rs 169.45 per cylinder in 2015-16 was considered (as used by the ministry in their estimation), and after considering the savings in subsidy due to opting ‘Give-it Up’ by 67.27 lakh consumers (as on February 29, 2016), the subsidy savings would reduce to Rs 3,473.48 crore, instead of Rs 5,107.48 crore estimated by the oil firms.

CAG said the government introduced the Direct Benefit Transfer on LPG scheme, called Pratyaksh Hanstantrit Labh Yojana or PAHAL Scheme on November 15, 2014 in 54 districts and in the remaining 622 districts on January 1, 2015 for transferring subsidy on LPG gas directly to the consumers.

In its audit findings, CAG said 47.23 lakh consumers did not receive permanent advance amounting to Rs 169.09 crore as on October 31, 2015. “Such non-transfer of permanent advance defeated the objective of providing the permanent advance under the PAHAL (DBTL) Scheme.”

It recommended effective steps to be taken to dis- incentivise diversion of non-subsidised domestic LPG cylinders to the commercial use.

Considering that audit scrutiny of the selected sample revealed existence of multiple connections, the entire database needs to be scrutinised by the companies and effective action should be ensured.

Transparency and integrity of the database needs to be maintained. While the OMCs have assured institution of appropriate checks for new additions to the consumer database, there is an urgent need to ensure correctness and integrity of the existing database, CAG said.

Appropriate and transparent documentation of blocking and un-blocking of suspected multiple connections also needs to be ensured, it said.

Also, appropriate input controls, data validations and strict oversight is essential at the distributer interface to ensure correctness of data entry at their end which would not only improve the integrity of the consumer database but also eliminate failed transactions arising from incorrect information.

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