Govt depends on direct transfer of LPG subsidies for 2014 success

In September 2012, Manmohan Singh pulled up a senior minister over the leaking out of a letter he wrote against the government’s decision to cap the LPG subsidy to nine cylinders a year.

delhi Updated: Sep 13, 2013 07:45 IST
Saubhadra Chatterji
Saubhadra Chatterji
Hindustan Times

It’s not very often that Prime Minister Manmohan Singh calls up ministers to express his displeasure. But in September 2012, Singh pulled up a senior minister over the leaking out of a letter he wrote against the government’s decision to cap the LPG subsidy to nine cylinders a year.

Singh’s displeasure was understandable as cooking gas prices had always been sensitive for the establishment. During the UPA-1 regime, Congress spokespersons regularly briefed the media about how the government had been protecting cooking gas prices while taking the “painful” decision of hiking petrol or diesel prices.

Now with the 2014 polls round the corner, UPA managers are hopeful that the success of the transfer of LPG subsidies to consumers through the direct benefits transfer (DBT) scheme will turn out to be the winner for UPA-2.

In the PM’s review meeting, the petroleum ministry proposed to roll out the LPG-DBT in 146 districts in 2013-14. But the government decided on covering 289 districts by January 1, 2014.

Under the new system, dealers will sell gas cylinders at market rates and the government will have subsidies on nine cylinders a year per customer transferred to their respective bank or post office accounts.

“There is political need for a visible impact of the DBT scheme and LPG is the one with the maximum visibility and impact,” concluded the latest meeting chaired by the PM on DBT in August.

The reason: Although hailed as the game-changer by Congress vice-president Rahul Gandhi, transfer of other subsidies — such as scholarships, old-age pension, wages under the NREGA — through the DBT scheme has failed to reach anywhere near the goal so far.

Initially named direct cash transfer, the scheme, launched in January this year, can save the government around Rs. 60,000 crore by plugging the leakages in the subsidy delivery system when fully implemented.

In some other schemes under the DBT, there is an ongoing tussle with state governments, particularly in the Opposition-ruled states.

Chief ministers, such as J Jayalalithaa of Tamil Nadu, objected to bypassing the state’s machinery to directly transfer subsidies.

They argue that in many schemes, the states’ burden is more than the Centre’s share. Keeping the state in the dark will also not help much as measures such as identification of beneficiaries and implementation of the scheme lie in the state’s domain.

And this is exactly where the DBT-LPG scheme scores. It does not need the states’ involvement as the oil marketing companies have their own digitised list of consumers. What’s more, it is a scheme that can easily cover 50% of the country, generating the right kind of impact among urban middle class families.

“As LPG subsidy impacts the monthly bills in a big way, the consumer will be more interested in enrolling for the DBT. Many other schemes may fail to generate such interest,” said a senior minister.

No wonder when the Centre is finding it difficult to bring more schemes under the DBT and stretching deadlines because of lack of beneficiary interest, the LPG-DBT has witnessed a rush.

First Published: Sep 13, 2013 00:47 IST