LPG subsidy: Panel for restoring direct benefit transfer scheme

Richa Mishra New Delhi | Updated on June 05, 2014 Published on June 05, 2014


“Re-launch direct benefit transfer for LPG immediately in the districts where it has already been implemented…,” an expert committee set up to review the functioning of the scheme has said.

The committee headed by former Director of IIT Kanpur S G Dhande in its report has said that the scheme can be re-launched in the same districts provided they meet the prescribed threshold of UID number issued, LPG connections and bank account seeding.

In its report, the committee has said that based on the evaluation of the scheme, feedback from various stakeholders and audit reports, it concludes that the scheme was successful in achieving its objectives – reducing diversion, eliminating ghost/duplicate connections, and improving LPG availability.

“…the scheme promotes enhanced financial inclusion. Thus, the committee strongly recommends that the DBTL scheme should be re-instated,” it noted.

Grievance redressal mechanism

For better implementation of the scheme, it has suggested that a centralised grievances redressal mechanism be in place.

The scheme was rolled from June 1, 2013 in 291 districts in phases. Till March 7, about ₹ 5,400 crore was transferred to more than 2.8 crore LPG consumers across the country.

The Aadhaar-linked scheme was put on hold from March 7 following complaints from consumers that either they didn’t have the Aadhaar number or have problems in seeding their accounts with the sponsor banks.

Last mile access to banking

The committee has also proposed that the last mile access to banking should be improved for smooth implementation of the scheme.

It has suggested that postal network should consider rolling out micro ATMs connected through core banking solution inter-operable with other scheduled banks through Aadhaar Payment Bridge. It has recommended use of cooperative banks and post offices for the purpose.

Further the committee has also sought reduction of value-added tax on LPG cylinders delivered to them as the sale happens at full rate – VAT is ad valorem and not reimbursed.

“On account of VAT burden, there is a need to incentivise consumers to join the scheme within the grace period…the committee suggests that Government could share part of this recurring saving by a one-time incentive, say by reimbursing the full cost of the first cylinder,” the report said.

Published on June 05, 2014
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