After getting 57.5 lakh “well-to-do households” to voluntarily give up the cooking gas subsidy, the government has now decided that the same won’t be available to consumers with annual taxable income above Rs 10 lakh while booking LPG cylinders from the New Year’s Day onwards.
People above this income level is estimated to be between 15-20 lakh, or less than 5% of the over 4 crore people, who pay personal income tax.
The PAHAL scheme, meant to ensure that the subsidy benefits go (only) to the targeted group, had weeded out over 3 crore bogus “household” LPG connections, a part of which were diverted for commercial purposes. Better targeting achieved through these means, coupled with the steep fall in crude oil prices, is expected to bring down the Centre’s LPG subsidy bill in the current fiscal to around Rs 20,000 crore, from Rs 36,580 crore in FY15 and Rs 46,458 crore in FY14.
While a press note issued by the petroleum ministry on Monday said consumer or his/her spouse having taxable income of more than Rs 10 lakh in the previous financial year won’t have the subsidy facility from booking from January 1 onwards, it added that, “in keeping with the approach of trusting citizens”, this will “initially” be on a self-declaration basis.
Currently, there are 16.35 crore LPG consumers in the country; of these people, 14.78 crore are receiving the subsidy in their bank accounts thanks to the PAHAL scheme.
At present, a consumer pays Rs 419.26 for every LPG cylinder refill in the national capital and the subsidy is Rs 140.48/cylinder, meaning the market price is Rs 559.74/cylinder. It could be recalled that when the Brent crude ruled at $100/barrel in early 2014, the market price for LPG refill was over Rs 900.
The subsidy saved from the ‘GiveitUp’ campaign is being utilised for providing new connections to the BPL families under the ‘Giveback’ campaign.
This enables provision of LPG, a clean fuel, to poor households by replacing the conventional fuels such as kerosene, coal, fuel wood, cow dung, etc. relieving the poor of the hardships and health hazards from such fuels.
“If we take into account the quota of 12 cylinders per consumer and the average LPG subsidy of Rs 336 per cylinder for the year 2014-15, estimated savings in LPG subsidy due to the blocking of 3.34 crore accounts work out to Rs 14,672 crore, during that year,” the government had earlier clarified.