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By trimming the number of beneficiaries of subsidised LPG cylinder, the government has managed to bring down the petroleum subsidy outgo.
The petroleum subsidy stood at 9 per cent of the Budget Estimate (BE), or a little over ₹1,230 crore in the April-July period of FY22, down from over ₹16,000 crore, or 40 per cent of BE, the last fiscal.
The subsidy is being provided mainly for customers in far-flung areas, industry sources said. Further, they said the total subsidy per cylinder today it is no more than ₹15-20, down from ₹150 earlier.
GiveItUp campaign
According to information provided by the Ministry for Petroleum and Natural Gas to the Rajya Sabha, as on July 1, 2021, of the total 29.11 crore LPG customers, 27.27 crore have joined the PAHAL (Direct Benefit Transfer) Scheme and are also Cash Transfer Compliant (CTC). As on March 31, 2021, 1.08 crore LPG consumers had opted out of subsidy under the ‘GiveItUp’ campaign.
Technically, all those who have not ‘given it up’ and are part of PAHAL, including the Ujjwala Yojana, are eligible for subsidy, which is the difference between the cost price and actual price paid by a consumer.
Higher LPG prices
The lower petroleum subsidy outgo is also despite LPG becoming pricier. As on September 1, the price of a non-subsidised 14.2 kg LPG cylinder was ₹884.50 in Delhi, up from ₹819 on March 1 and ₹581.50 on May 1, 2020.
The last date is important, as the website of the Petroleum Planning & Analysis Cell or PPAC (a part of the Oil Ministry) clearly states that since May 2020 it has been nil LPG subsidy in some markets like Delhi.
“For consumers in far-flung and remote areas, the government continues to provide some subsidy due to higher inland freight from port to the bottling plant,” it said.
Anil K Sood, Professor and Co-founder of Hyderabad-based Institute of Advanced Studies in Complex Choices, said the subsidy amount is lower than budgeted as there has been no subsidy on domestic LPG since March 2021. A look at earlier Cabinet Summaries shows that there has been no LPG subsidy even last year.
“PPAC’s report for FY21 puts the Direct Benefit Transfer of LPG Subsidy at ₹3,658 crore and another cost of ₹8,162 crore under the Garib Kalyan Package,” he said.
The Budget provision in FY22 for petroleum subsidy includes Direct Benefit Transfer (₹12,480 crore), other subsidies payable including for North-Eastern Region (₹450 crore), Feedstock subsidy to BCPL/Assam Gas Cracker Complex (₹1,078.35 crore) and Project Management Expenditure (₹65 crore).
Industry sources claimed that last fiscal the subsidy on industry was over ₹3,500 crore. One source reiterated that “Subsidy continues to be cash transferred in far-flung areas. However, the subsidy varies from one location to another depending on the cost of LPG in bottling plants attached to each location.”
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