Macro Economy

Will BJP Govt cut the cap on subsidised LPG cylinders?

Richa Mishra New Delhi | Updated on March 12, 2018 Published on June 09, 2014

Hard times The subsidy places a huge burden on the exchequer.   -  THE HINDU

Subsidy burden on LPG alone was ₹46,458 cr in FY-14, up from ₹39,558 cr in the previous year

The Petroleum & Natural Gas Ministry is considering seeking a reduction in the cap on the number of subsidised LPG cylinders.

At present, every household gets 12 cylinders every year.

As part of its proposal to reduce the subsidy burden, this may be cut to six.

According to official sources, the pruning may be done in two stages, first to nine and then to six.

A final call will be taken by the Cabinet Committee on Political Affairs.

The BJP is looking to reduce dole-outs, particularly in urban clusters, but will its Government bite the political hot potato especially with Maharashtra, Haryana and Delhi going for elections this year?

A task force on subsidy set up by the UPA-II Government had suggested a cap of six cylinders and this was even implemented from September 14, 2012.

But this cap was revised, first to nine in January 2013, and then to 12 from financial year 2013-14.

The subsidy burden on LPG alone during 2013-14 was ₹46,458 crore, up from ₹39,558 crore in 2012-13.

The Petroleum Ministry, in its presentation to the Prime Minister’s Office, said the cap should not have been raised to 12.

Innovative ways

According to BJP sources, the Government could look at innovative ways to cut subsidy such as offering smaller sized cylinders at market price and expanding the piped gas network.

It will also need to address the concerns of States such as Uttar Pradesh, Bihar, Odisha and West Bengal, which want to continue with the subsidy.

But, according to one official, studies show that a BPL family, on an average, uses six-seven cylinders annually.

“The very basis of putting a cap was to shield consumers from the high international prices. Today, the benefit of the cap also goes to those who can afford to buy cooking gas at market price.”

Huge subsidy burden

Striking a different note, an expert committee set up to review the Direct Benefit Transfer scheme for LPG has noted that the burden of the huge amount on the state exchequer has not been communicated to consumers.

The committee has pitched for the re-launch of the direct subsidy transfer scheme, which was introduced to curb the diversion of subsidised LPG for commercial purposes.

The Ministry has sought public opinion on the report.

Published on June 09, 2014
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