Slowing DBT enrolments to help govt save about 20% in LPG subsidy

The slowing pace of enrolment of beneficiaries under the modified direct benefits transfer scheme for cooking gas might prove a blessing for the government, which could save up to 20 per cent in liquefied petroleum gas (LPG) subsidy spending.

After enrolment of 126 million of the 150 million LPG consumers for the DBT scheme, the pace of fresh additions has slowed. The government has so far transferred around Rs 11,000 crore to bank accounts of beneficiaries under the scheme.

"Daily enrolments have now come down to 200,000, against one million initially. At this rate, the number of beneficiaries will never reach 150 million, as 20-30 million connections will remain outside of the subsidy benefits," said a senior official close to implementation of the scheme.

He added these 20-30 million consumers would comprise ghost entries, duplicate connections, those that have voluntarily opted out of the scheme and those without bank accounts. The government has over the past two years already identified and eliminated around 10 million fake connections under a de-duplication drive. The latest round of elimination through enrolments under the modified DBT scheme will add to that list.

Under the new scheme, consumers who are not enrolled are given a three-month grace period, during which they receive cylinders at subsidised rates. After the grace period, they are given another three months (up to June) as a parking period. During the parking period, they have to buy cylinders at the market rate. If a consumer joins the scheme within the parking period, his entitlement for subsidy on the basis of consumption during this period is to be transferred to his bank account.

The official also said it might be too early to arrive at the exact amount of subsidy savings for the government, as the true picture would emerge only after June, when the parking period for subsidy ends. But the savings, he added, could be around 20 per cent.

At present, consumers are entitled to 12 cooking gas cylinders (of 14.2 kg each) at subsidised rates during a year. If there is a requirement beyond this, gas cylinders have to be procured at the market price. A subsidised 14.2-kg cylinder in Delhi is currently available for Rs 417, while the market price is Rs 621. Going by the current crude oil prices and considering a subsidy of Rs 204 on each cooking gas cylinder, the government could end up saving around Rs 5,000 crore annually.

The government had last year estimated its subsidy savings from the DBT scheme at Rs 10,000 crore. However, with the historic 50 per cent slump in global crude oil prices between June 2014 and January 2015, the per-cylinder subsidy came down from Rs 450 to Rs 204. The government's overall petroleum subsidy burden also came down from Rs 85,000 crore in 2013-14 to Rs 60,200 crore last year (2014-15). In the current financial year, the finance ministry has budgeted for a petroleum subsidy bill of Rs 30,000 crore, including Rs 22,000 for LPG and Rs 8,000 crore for subsidised kerosene.

The National Democratic Alliance government at the Centre had in mid-November last year started the modified DBT scheme for LPG - by delinking it from Aadhar - in 54 districts of the country. Later, the scheme was rolled out across the 676 districts on January 1. Since then, the enrolments rose gradually until 85 per cent of the total LPG consumers had been covered.