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Direct LPG subsidy savings only 15% of government claim: CAG

business Updated: Aug 13, 2016 15:07 IST

LPG Gas Cylinder.(HT Archive)

Picking holes in the government claims, the Comptroller and Auditor General of India (CAG) on Friday said savings in LPG subsidy paid directly to consumers was only Rs1,764 crore, only about 15% of the amount claimed.

In a report tabled in Parliament, the CAG said bulk of the savings in subsidy was due to sharp fall in global prices.

“The actual subsidy payout during the period from April 2015 to December 2015 was Rs 12,084.24 crore against Rs 35,400.46 crore during April 2014 to December 2014,” it said. Of the ₹23,316.12 crore savings in subsidy, the CAG said Rs 21,552.8 crore was on account of fall in crude oil price.

At the same time, “the effect on the same (subsidy reduction) due to reduced offtake of cylinders by consumers worked out to Rs 1,763.93 crore”, the CAG said. “Therefore, it is evident that the lower subsidy rates in 2015-16 is, by far, the most significant factor resulted in subsidy savings.”

Under the DBT, subsidy is directly paid into bank accounts of the users, eliminating duplicate and fake connections.

The oil ministry has claimed the savings from the elimination of fake/duplicate/ghost cooking gas LPG connection as a result of implementation of the DBT in 2014-15 was Rs 14,818.4 crore. This, after considering an average subsidy of Rs 369.72 per cylinder for 33.4 million blocked consumers. Consumers are entitled to subsidy on 12 14.2-kg cylinders in a year.

The CAG said the petroleum ministry in February 2016 estimated potential savings in LPG subsidy for 2015-16 at Rs 9,211 crore while the oil marketing companies put it at Rs 5,107.48 crore.

The auditor pointed out that the ministry had assumed that the inactive or blocked consumers, who were not eligible for subsidy would have availed the entire quota of 12 cylinders: the national average per capita consumption in 2014-15 was only 6.27 cylinders.