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Direct transfer plan saved Rs 21,000 crore LPG subsidy in 2 years

Times of India:  May, 2016

New Delhi: Payment of cooking gas subsidy directly into the bank account of consumers has helped the government save Rs 21,000 crore in the last two financial years by eliminating duplicate connections and diversions, oil minister Dharmendra Pradhan said on Wednesday.

The government began paying subsidy directly into bank accounts of cooking gas consumers in select districts from November 2014 and in the rest of the country from January 1, 2015.

As on April 1, 2015, there were 18.19 crore registered LPG consumers and 14.85 crore active consumers implying a gap of 3.34 crore consumers which were duplicate, fake or inactive accounts.

"Eliminating such 3.34 crore consumers helped save Rs 14,672 crore in 2014-15 fiscal (year ending March 31, 2015)," Pradhan said at a seminar on subsidies here.

The saving in 2015-16 was about Rs 7,000 crore, lower than the previous fiscal mainly because global oil prices slumped thereby cutting the subsidy required.

"An average of Rs 366 per cylinder subisidy was considered for 2014-15 fiscal. If we take into account the quota of 12 cylinders per consumer and the average LPG subsidy of Rs 336 per cylinder for the year 2014-15, estimated savings in LPG subsidy due to the blocking of 3.34 crore accounts works out to Rs 14,672 crore, during that year," he said.

The average subsidy in the following year was lower, he said but did not give exact subsidy number. On April 25, TOI first reported subsidy on petroleum products have come down by nearly 29% in 2015-16, marking a saving of Rs 54,223 crore from the year-ago period on the back of low crude prices and market reforms.

Latest government data pegged subsidy on domestic LPG and kerosene, the only two fuels subsidised by the government, at Rs 22,085 crore in 2015-16 against Rs 76,308 crore in 2014-15.

Subsidy on LPG is estimated at Rs 12,092 crore for 2015-16, down from Rs 40,569 crore in 2014-15. Similarly, subsidy on kerosene declined to Rs 9,993 crore in 2015-16 from Rs 24,804 crore in 2014-15, Pradhan had told the Lok Sabha.