Rahul effect: Cap on LPG cylinders raised to 12
Direct subsidy transfer put on hold;
new subsidy limit to be effective from February 1
Crucial decisions Petroleum Minister Veerappa Moily and Information and Broadcasting Minister Manish Tiwari briefing the media after the Cabinet meeting in New Delhi on Thursday. RV Moorthy
On January 17, Rahul
Gandhi had asked Prime Minister Manmohan Singh to consider raising the limit
from 9 to 12.
After the Cabinet
Committee on Political Affairs (CCPA) meeting on Thursday, Petroleum &
Natural Gas Minister M Veerappa Moily said that the decision will increase the
LPG subsidy outgo by Rs. 5,000 annually taking it to Rs. 85,000 crore.
Currently, the
market price of a 14.2-kg domestic LPG cylinder is Rs. 1,258, but after the
subsidy, it costs Rs. 414 for the consumer. Part of the loss incurred by the
oil marketing companies is met by upstream companies such as ONGC, Oil India
On how the subsidy
cap works, an official explained if one exhausts the quota of 12 before the
year ends and needs a refill, he will have pay the market price for the refill.
Usually, one can
book the second cylinder after 21 days of the earlier booking and the cylinder
usually gets delivered after 4-5 days. So the consumer gets, on an average, one
cylinder a month.
Meanwhile, the
domestic LPG dealers are worried about being stuck with market price linked
cylinders, as almost 90 per cent of the consumers have already exhausted their
quota of 9 subsidised cylinders.
“We have lifted
these stocks from the companies, now we will have to wait for a communication
on whether they will reimburse us or not,” a local dealer said.
Subsidy transfer
Citing complaints in
implementation from consumers as well as State Chief Ministers, Moily said that
an ‘in-principle’ decision has been taken to form a committee to look into the
complaints and till it gives the report, the direct benefit transfer for LPG
will be on hold. “The constituents of and time line for the committee will be
decided in due course of time,” the Minister added.
‘Game changer’
Termed as a ‘game
changer,’ under the Direct Benefit Transfer Scheme, the Aadhar number is seeded
in the bank account, where the subsidy amount is transferred immediately after
booking.
Current coverage
Currently, the
scheme is operational in 184 districts, covering 6.57 crore LPG consumers.
Recently, the
Ministry announced extending this to 291 districts covering a total of 9.22
crore LPG consumers by January 1, 2014
Suspension of the
scheme has come at a time when the Supreme Court ruled that Aadhar card cannot
be made mandatory to enjoy Government schemes and subsidies.
On whether DBT will
be suspended for other schemes too, Information and Broadcasting Minister
Manish Tiwari responded in the negative.
CONSUMER RELIEF
· A cap of 6 cylinders was introduced in September 2012
· It was raised to 9 in January 2013 and to 12 now
· It will benefit 14 crore domestic LPG consumers
· Subsidy outgo will go up to Rs. 85,000 crore
(This article was
published in the Business Line print edition dated January 31, 2014)
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