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Limit subsidised LPG use: Panel

delhi Updated: Mar 24, 2011 01:12 IST
Anupama Airy
Anupama Airy
Hindustan Times
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To contain the huge subsidy on cooking gas, the government may fix the maximum number of LPG cylinders you can consume in a year. And you may have to pay the market price for anything beyond the ceiling.

While the subsidised price of a liquefied petroleum gas (LPG) cylinder is Rs345, its actual market price is around Rs650. Last year, the government had to pay Rs22,000 crore as subsidy on cooking gas.

“The only way to control the subsidy outgo on LPG is to fix the number of subsidised cylinders,” a member of a task force headed by IT professional Nandan Nilekani told HT. The task force is working on direct transfer of subsidies on kerosene, LPG and fertilisers.

“The eligibility criteria to fix the number of subsidised LPG cylinders a year will be linked to the consumer’s paying capacity,” the member added.

At present, there are no such eligibility criteria.

The task force, formed by finance minister Pranab Mukherjee while presenting Budget proposals for 2011-12, met on March 8 and 16 and will submit its final report by June-end.

The member said state-owned oil companies had been asked to work on a pilot project for direct transfer of LPG subsidies to the intended beneficiaries by utilising the unique identification number platform.

There are 12.5 crore household LPG connections in India which at present cover 50% of the country’s population.

Although LPG is a free-market product, the pricing of both domestic LPG and PDS kerosene is controlled by the government and oil marketing companies (OMCs). And unlike kerosene, checking diversion of domestic LPG for commercial use is not a problem as the OMCs have a computerised database of consumers for easy monitoring.