DBT for kerosene in 26 districts from April 1

After the success of paying subsidy to LPG users in their bank accounts, the government will from April 1 roll out a similar programme for kerosene, where the users will buy the cooking fuel at the market rate and get the subsidy money directly in their bank accounts.

The cash subsidy will be equivalent to the difference between the current public distribution system (PDS) price of about Rs 12 and the market rate of Rs 43 per litre.

The move will help curtail subsidy outgo for kerosene, which in 2014-15 was Rs 24,799 crore.

“Several state governments have come forward to implement direct benefits transfer (DBT) in kerosene,” an official statement said on Friday.

The scheme will be rolled out in 26 districts across eight states — Chhattisgarh, Haryana, Jharkhand, Maharashtra, Punjab, Himachal Pradesh,  Rajasthan and Madhya Pradesh.

The Centre has allocated 8.6 million kilolitre of PDS kerosene to states for FY16,  though total annual consumption is only 7.13 million kilolitre.

“The allocation is higher than the total household demand in the country. This is evidence that part of the kerosene allocation is diverted for non-eligible purposes,” said an official statement.

The states will be given 75 per cent of subsidy savings during the first two years, 50 per cent in the third year and 25 per cent in the fourth year.

If some states voluntarily agree to cut kerosene allocation beyond the savings due to DBT, a similar incentive will be given to them. The calculation will be based on net savings in consumption at the state level.

Kerosene demand for both lighting and cooking  has come down thanks to rural electrification and the rise in LPG connections. Nearly 4.5 million new LPG connections have also been given to the poor.

The government also advised states to take all necessary steps to ensure eligible beneficiaries, particularly in rural areas, are able to access their full entitlement.

To ensure the intended beneficiaries don’t suffer while switching to the new scheme, subsidy will be credited to their bank accounts in advance during the initial purchase.

PLUGGING LEAKAGES

• Cash subsidy on kerosene will be equivalent to the difference between current subsidised price of Rs 12 and market rate of Rs 43 per litre
   
• Subsidy outgo for kerosene in 2014-15 was Rs 24,799 crore
   
• Centre to give states 75 per cent of subsidy savings during the first two years, 50 per cent in the third year and 25 per cent in the fourth year
   
• Nearly 4.5 million new LPG connections have been given to the poor to reduce dependence on kerosene