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Fuel subsidy: Govt to give Rs 400 to BPL families

delhi Updated: May 28, 2011 02:08 IST
Chetan Chauhan
Chetan Chauhan
Hindustan Times
Highlight Story

As part of India’s first direct cash transfer scheme, every below poverty line family may get over Rs 400 per month from the government from April next year in lieu of fuel subsidy for kerosene and liquefied petroleum gas cylinders.

The move, which is expected to be considered by the Empowered Group of Ministers (EGoM) on June 9, is aimed at checking use of kerosene for fuel adulteration and reduce financial loss to fuel companies.

New methodology, if accepted, will benefit around 40 crore poor Indians.http://www.hindustantimes.com/Images/HTEditImages/Images/28_05_pg12a.jpg

The smart card
Once the new regime is introduced, a below poverty line (BPL) family will get approximately Rs 300 per month on a smart card to be registered in name of a household woman for kerosene and another Rs 100 for LPG cylinder.
“These smart cards will have Aadhaar numbers to prevent any leakages,” as official said.
Kerosene and LPG cylinders will be available at the market rate and the poor will get it at the existing subsidised price after the money will be deducted from their smart card.

The work for introducing the regime has already started in states such as Haryana and Andhra Pradesh.

Lessening burden
The fuel subsidy burden on the Centre in 2010-11 was Rs 38,336 crore in the last financial year, of which about R16,000 crore was meant for providing kerosene at subsidised rates to the poor. In this budget, the total petroleum subsidy is Rs 23,640 crore.

Till now, the government had to bear a cost of Rs 28 per litre to provide kerosene at highly subsidised rate of Rs 12 per litre and over Rs 150 for a LPG cylinder.

The low cost meant incentive to sell kerosene for adulteration of petrol, whose market price is Rs 63 per litre.
“As the product will move in the entire distribution chain at full price, there will be no incentive left for diversion of kerosene,” says a proposal mooted for empowered group of ministers (EGoM) headed by Pranab Mukerjee.
The government intends to introduce the new regime from April 2012.