Decision despite success of Alwar pilot project in checking illegal diversion

The fear of losing public support before the General Elections in 2014 has made the Government go slow on its plan to introduce direct transfer of cash subsidy for kerosene.

“It is not happening for kerosene till the next elections,” a senior Cabinet Minister told Business Line.

Any change in kerosene pricing has direct implications on the vote-bank. Kerosene is sold at the subsidised rate of Rs 14.96 a litre in Delhi. Initially, the direct cash transfer of subsidy to consumers of domestic LPG and PDS kerosene (kerosene sold through the public distribution system) was to be introduced in 2013-14.

While the Government has gone ahead and introduced the scheme for domestic LPG, it has held back the same for kerosene.

Lower offtake

A pilot project was run in Alwar, Rajasthan in December 2011 for direct cash transfer of subsidy for kerosene. The Government termed the project a success. As on May 2013, the Government traced 25,843 card-holders and a subsidy of Rs 83.34 lakh was deposited in 16,148 bank accounts.

The pilot showed that only 22 per cent of targeted consumers lifted their kerosene quota — an indication that diversion was being checked.

In December 2011, against an allocation of 84 kilolitres, only 36 kilolitres were lifted.

The case was similar in January 2012. In February 2012, zero quantity was lifted against the allocated quantity of 78 kilolitres. Simply put, the offtake has been lower than the allocation.

Further, the Finance Ministry had decided to pay a grant of Rs 100 crore for each State joining the direct transfer of cash subsidy on PDS kerosene scheme till March 31, 2012. Nearly, 11 States and Union Territories, including Rajasthan, Madhya Pradesh, Sikkim, Maharashtra, Jharkhand, Himachal Pradesh, Kerala, Goa and Andhra Pradesh had confirmed their participation.

According to the model crafted for kerosene consumers, the Finance Ministry would transfer the cash subsidy to States every quarter on a pro-rata basis.

The State, in turn, would transfer the cash subsidy to the beneficiaries’ accounts in advance for a full quarter at the beginning of the first quarter of the scheme. Thereafter, it would be given on a monthly basis. The scheme is yet to be implemented.

Talking about the success of direct transfer of domestic LPG subsidy, the Minister said it was launched across 18 districts from June 1.

LPG subsidy

Till June 14, the scheme has seen half-a-million transactions — 1.7 lakh domestic cooking gas consumers got subsidy of Rs 5.7 crore.

An aggregate 5.14 lakh transactions amounting to Rs 19 crore were made.

(This article was published on June 24, 2013)
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