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Direct benefit transfer scheme launched, to cover 676 districts

On New Year’s day, the government unveiled world’s largest direct subsidy roll out scheme — Direct Benefit Transfer for LPG consumer (DBTL) — across all the 676 districts in the country covering 15.3 domestic cooking gas consumers. The scheme is aimed at an efficient subsidy delivery mechanism to the targeted consumer curbing leakages.

“A smart delivery mechanism will reach the people of India. The consumers will get hassle-free service and at the same time, government would save on subsidies,” petroleum minister Dharmendra Pradhan said.

The Narendra Modi-led government has relaunched DBTL in 54 districts since November 15. The scheme has been extended to the entire country by January 1.

How will it work: a consumer’s account would be credited with `568 as one-time advance, while he books his first refill starting January 1. Post the one-time advance, every time a refill is delivered the subsidy amount will be credited to the bank account linked with LPG connection. The mechanism would be similar to consumers of Indane, Bharat Gas or HP Gas.

For instance, in the national capital, after the one-time advance of `568, consumer’s account would be credited with another `235.91 (which changes every month) for every domestic refill delivered. He will have to shell out another `417/cylinder from his pocket and pay `652.91 to the cylinder delivery person. This will be valid for 12 subsidised refill quota for every consumer. The consumers need to register bank accounts with their dealers, Aadhar is not mandatory.

In the pilot scheme rolled out in 54 districts since November 15, oil marketing companies — IOC, HPCL and BPCL — had credited `590 crore to consumers’ accounts till December 29, 2014. Every day, nearly 30-35 million domestic refills are being delivered across the country. This takes the total count of domestic cylinders delivered in a year to about 100 crore. Nearly 99.67% of total domestic consumers are within the subsidised limit of 12 refills every financial year.

Pradhan said that the pilot scheme has covered nearly 37-38% of domestic LPG consumers. The minister, however, refused to divulge on how much subsidy government targets to save with DBTL. “This (savings in subsidy) will come out once DBTL rolls out across the country,” he said.

The industry watchers are of the view that the government aims at annual savings of `10,000-12,000 crore in the subsidy on cooking fuel when the DBTL scheme is rolled out across India. The subsidy on domestic cooking gas was `46,458 crore (shared between government and upstream companies) out of total losses on subsidised petroleum products (under-recovery) at `139,869 crore in FY14. This is likely to be reduced to the tune of `28,000 crore for domestic LPG in FY15, while total under-recovery is expected to be around `86,000 crore.

The government has announced that over half the country’s cooking gas consumers, or 76.3 million households, had joined the cash transfer scheme that aimed at reducing the subsidy through better targeting of beneficiaries.

“More than `1,260 crore have been transferred into beneficiary accounts so far. Consumers in rural areas are joining in large numbers. In the last one month more than 40 per cent of consumers in Odisha, Bihar, Chhattisgarh, Uttar Pradesh, Assam and Meghalaya have joined the scheme,” the petroleum ministry said in a statement.

It also said Gujarat, Tamil Nadu, West Bengal, Uttarakhand, Jammu and Kashmir, and Arunachal Pradesh had posted above 35 per cent growth in the number of people joining the scheme.

Consumers have three months to link their gas connections with bank accounts and Aadhaar numbers. After March consumers will have to buy gas cylinders at market prices but the subsidy for the next three months will be kept in an escrow account which they will receive as soon as they provide their bank details.

Linking bank accounts with Aadhaar is not required under the scheme although the government is encouraging consumers to do it. Linking with Aadhaar numbers is expected to weed out duplication.

Aadhaar has enrolled 728 million people and claims to have covered 75 per cent of the population in 16 states and Union Territories, including Kerala, Himachal Pradesh and Delhi.

Cooking gas consumers are entitled to 12 liquified petroleum gas (LPG) cylinders or 34 bottles in a year at subsidised rates. Any purchase beyond these has to be at the market price. A subsidised 14.2 kg LPG cylinder is available for `417 in Delhi and the subsidised 5 kg bottle for `155.

PAHAL, as the scheme has been nicknamed, is the largest cash transfer programme in the world. Similar schemes cover 22 million households in China and 12 million households in Brazil.

Between November 15 and December 31, the sale of subsidised cylinders in 54 districts where the scheme was being implemented grew 9 per cent against 17 per cent in the remaining 622 districts. There are 152.4 million active cooking gas customers, 74.1 million have become compliant with the cash transfer and 52.3 million have linked their Aadhaar numbers.

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