Oil Minister M Veerappa Moily said raising the quota of subsidised LPG to 12 cylinders from nine at present, will cost Rs 5,000 crore in additional subsidy annually.
New Delhi: In a setback to a UPA project touted as a 'game-changer', government on Thursday suspended the ambitious scheme to pay LPG subsidy in cash to consumers directly but raised the quota of subsidised cooking gas to 12 cylinders per household in a year.
Announcing the decision taken by the Cabinet Committee on Political Affairs, Oil Minister M Veerappa Moily said raising the quota of subsidised LPG to 12 cylinders from nine at present, will cost Rs 5,000 crore in additional subsidy annually.
The direct benefit transfer for LPG (DBTL) scheme, where consumers in 289 districts in 18 states got cash of Rs 435 in their bank accounts so that they could buy cooking gas at market rate, has been put on hold because many complained that they were not get the benefit in absence of either an Aadhaar card or a bank account linked Aadhaar.
DBTL was touted by the UPA government as game-changer as it plugged diversions and helped subsidy reach the intended beneficiaries.
"There were certain issues on implementation on the ground because at places the seeding between Aadhaar number and bank account was not completed. Therefore to ensure that customers are not at inconvenience in the interim it has been decided that a committee will be constituted which will review only the implementation of DBTL. Pending the review, consumer will get subsidised cylinders as he was getting earlier," he said.
After the suspension, the government will pay subsidy to oil companies as was practice before and consumer will get subsidised cooking gas from them.
"It is not admission of failure on the part of the scheme and we are quiet proud and happy that this programme has gone on very well. Even if there is a marginal error, we need to correct it. We don't want to proceed further so we have to go back on the reforms measure," Moily said.
After today's decision, households will get one cylinder extra, on top of the quota of 9 cylinders, in February and March and from the fiscal year beginning April, they will be entitled for 12 cylinders -- one cylinder per month at subsidised rates.
Currently, a subsidised LPG cylinder costs Rs 414 in Delhi while the market price, which consumers pay for any demand beyond the quota, comes to Rs 1,241.
Explaining the reasons behind the move to put on hold a scheme that was dubbed 'game-changer, Moily said there were complaints about implementation of the scheme and a committee has been formed to look into them.
"Pending the committee examining the issues, the Aadhaar- linked LPG subsidy transfer has been put on hold," he said but did not give details of either the committee or the timeframe set for it to give its report.
DBTL, under which consumers got Rs 435 advance money in their bank accounts so as to help them buy a LPG cylinder at market price, was this month extended to 105 districts including Delhi and Mumbai.
The scheme coverered almost half of the country with direct subsidy transfer being initiated in all states baring Chattisgarh, Bihar and Jammu and Kashmir as well as North Eastern states.
The move to raise the quota of subsidised LPG came days after Congress vice president Rahul Gandhi asked Prime Minister Manmohan Singh to increase the quota of subsidised LPG to 12 cylinders of 14.2-kg each.
There had also been demands from within the Congress to scrap the DBTL as many consumers did not either have the Aadhaar number or banks accounts linked to the Aadhaar number.
Moily said 89.2 percent of the 15 crore LPG consumers use up to nine cylinders in a year and only 10 percent have to buy the additional requirement at the market price.
After the quota is raised to 12, about 97 percent of the LPG consumers would be covered by subsidised LPG, he said.
The government had initially capped the supply of subsidised domestic LPG cylinders to six per household annually in September 2012 in a bid to cut its subsidy bill. The quota was raised to nine in January 2013.
Consumers, who have exhausted their quota, have to buy LPG at the market price of Rs 1,258 per cylinder. Subsidised LPG costs Rs 414 per cylinder in Delhi.
Asked if consumers can avail of another refil if their exhaust the montly entitlment before expiry of 30 days, Inforamtion and Broadcasting Minister Manish Tewari said the government will fine-tune the scheme if consumers faced any difficulty.
Asked whether the review of DBTL is in view of Supreme Court observation, Tewari said, the court is adjudicating in the matter. It would be in appropriate to comment on sub-judice matter.
"This decision is a standalone decision and this decision of review is only confined to LPG, the subsidy of which was transfered through DBT paradigm," Tewari said.
"As far as other scheme are concerned there has been no complaints or very minimal complaints with regard to its implementation," he added.