Direct cash transfer of LPG subsidy from June

The government will from June 1 roll out direct transfer of cash subsidy on cooking gas (LPG) in 20 districts as it looks to cut its subsidy outgo by up to Rs 10,000 crore annually by eliminating diversions.

New Delhi: The government will from June 1 roll out direct transfer of cash subsidy on cooking gas (LPG) in 20 districts as it looks to cut its subsidy outgo by up to Rs 10,000 crore annually by eliminating diversions.

Oil Minister M Veerappa Moily said 76 lakh consumers in 20 districts like Mysore, North Goa, Pondicherry, Mandi and Hyderabad, will get Rs 435 in their back accounts every time they book an LPG refill.

These consumers then will have to buy cooking gas at market price which is double the Rs 410.50 rate for a 14.2-kg bottle in Delhi.

Announcing the launch, Moily said the government intends to extend the scheme to rest of the country but refused to give timelines for the same.

"We are ready to launch the direct benefit transfer (DBT) scheme for LPG all over the country but we want to see the results of the roll-out in these 20 districts," he said.

Moily said the 20 districts selected have high Aadhaar or unique identification number penetration.

While as many as 89 per cent of the LPG consuming population in these districts have Aadhaar number, the government will give a three-month grace period to them to procure the UID number and seed it with their bank accounts where cash subsidy has to be transferred.

After three months, that is from September 1, only consumers having Aadhaar and banks accounts linked to them will get cash subsidy and the rest will have to buy LPG at market price, he said.

The government anticipates a saving of Rs 8,000 to 10,000 crore in LPG subsidy annually after the scheme is rolled out all over the country.

The massive KYC exercise to weed out duplicate and fictitious consumers have resulted in blocking of 63 lakh connections that alone will save about Rs 2,000 crore in subsidy.

The nation has some 14 crore LPG consumers of which 2.5 crore were suspected to be duplicate or consumers holding more than one connection at the same address.

"Of these 63 lakh connections have been blocked as there was no response from the owners in past one year to requests for completing the Know-Your Customer (KYC) formalities," said Neeraj Mittal, Joint Secretary (Marketing) in the Oil Ministry.

The government had in January launched what is being dubbed as a game-changer DBT, wherein government benefits like pensions and scholarships are directly transferred to beneficiaries.

The scheme is now being extended to LPG with the aim that the government subsidy reaches the intended beneficiary only.

Currently, consumers are entitled to nine 14.2-kg cylinders of LPG at subsidised rates in a year from LPG dealers. Many of these are black-marketed to unintended users like commercial establishments who otherwise have to buy the fuel at market price.

Moily said the 20 districts where the DBT for LPG is being launched from June 1 include Anantpur, Chittoor, East Godavari, Hyderabad and Ranga Reddy in Andhra Pradesh, Diu in Daman and Diue, North Goa, Bilaspur, Hamirpur, Mandi and Una in Himachal Pradesh, Mysore and Tumkur in Karnataka, Pathanamthitta and Wayand in Kerala, Wardha in Maharasthra, Pondicherry, SBS Nagar/Nawanshahar in Punjab and East Nimar (Khandwa) and Harda in Madhya Pradesh.

These districts have 76 lakh LPG consumers and 520 LPG dealerships. 89 percent of the LPG consumers have Aadhaar number, 52 percent have been seeded in the national LPG database and 15 percent already have their bank accounts seeded with UID number.

"The scheme aims to curb leakages and prevent black-marketing and provide subsidy to consumers in their bank accounts," Moily said.

All LPG consumers are advised to immediately get an Aadhaar number if they don't have one at Aadhaar enrollment centres and open a bank account with Aadhaar number if they do not have one by going to a bank branch with Aadhaar number, he said.

"If they already a bank account, then they have to link their Aadhaar number with their bank account by visiting their branch or through a request form available with LPG distributors and deposit it in the drop boxes placed at LPG distributors premises," he said.

The Aadhaar number has to be provided to LPG distributor for linking with LPG consumer number.

"For the benefit of LPG consumers, who cannot complete formalities by June 1, a grace period of three months is being given to complete the formalities. After this period, all consumers who have not completed the formality will get LPG cylinders at market price, without any subsidy, till they complete the same," he said.

New LPG connections in these districts too will be available only to persons with Aadhaar number.

Detailing the scheme, he said all Aadhaar linked domestic LPG consumers will get an advance in their bank account as soon as they book the first subsidised cylinder even before delivery.

"As soon as, the first cylinder is delivered to such consumers, subsidy eligible on date of delivery will again get credited in the bank account, which will then be available for the purchase of the next cylinder at market rate," he said.

Subsidy eligible on each such domestic cylinder, up to the cap of 9 cylinders per year will be directly transferred to the Aadhaar enabled bank account of the consumer.

Consumers who do not provide Aadhaar will continue to get LPG cylinders at market price.