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Can afford market rates? You may not get cheaper cooking gas

The government may soon decide whether you actually need the subsidy on your cooking gas cylinder by drawing a line on who deserves it.

business Updated: Jan 28, 2015 01:07 IST
Anupama Airy
Anupama Airy
Hindustan Times
LPG,Kerosene,Cooking fuels

The government may soon decide whether you actually need the subsidy on your cooking gas cylinder by drawing a line on who deserves it.

In a bid to reduce expenditure and avoid wasteful outgo of fuel subsidy, the Centre is likely to further prune the eligibility criteria for consumers who actually need subsidies on cooking fuels — LPG and kerosene.

At present, a subsidy of Rs 300-350 is available on an LPG (cooking gas) cylinder.

Top government sources revealed that while subsidies on LPG and kerosene will not be completely eliminated, a classification of the category of consumers who do not need subsidies is being carried out by the finance ministry.

Questions that are being asked include: Which class of consumers actually needs subsidies on its consumption of cooking gas? Should a family of three to four members which can afford to spend anywhere between Rs 4,000 to 5,000 on an average for eating out in a month be given the LPG (cooking gas) subsidy?

Further, if an earning member of a household comes in the 30% income tax slab (the highest tax bracket), what relevance does the cooking gas subsidy hold for her and her family?

Government officials said such questions are being addressed by the finance ministry, which is preparing to finalise a roadmap for rationalisation of LPG subsidies, the details of which are likely to be unfolded by finance minister Arun Jaitley in the upcoming budget to be presented on February 28.

Reducing the subsidy burden will put more money in the hands of the exchequer and also help the government finance social schemes for the needy.

Jaitley has already said subsidies on cooking fuels including LPG and kerosene should be targeted only for the needy. According to government estimates, about 10 million customers can be taken out of the subsidy list as the annual LPG subsidy of about Rs 4,000 per head does not translate into major savings for them.

“A process has already begun to curtail LPG subsidy for the rich and elite class of consumers… similarly for the rest, a classification of the category of consumers who need subsidies is being done,” a senior government official said.

The first phase of subsidy reform has already begun and the government has initiated direct transfers of LPG subsidy into the accounts of beneficiaries.

Petroleum minister Dharmendra Pradhan has also initiated measures where under a two-month campaign that began on New Year Day, he is sending phone messages to affluent consumers such as industrialists, politicians, sportsmen, media-barons and celebrities asking them to surrendering their subsidy on LPG.

“I am sure that this effort will yield good results and most politicians and my rich and elite friends have given up subsidy on LPG…I will now call up industrialists, sportsmen and celebrities and ask them to give up their LPG subsidy,” Pradhan told HT.

First Published: Jan 27, 2015 23:17 IST