EGoM to consider India’s first cash transfer of subsidy to the poor

To check fuel adulteration and ensure poor get the benefit, the government intends to transfer the subsidy amount for kerosene directly to around 40 crore poor from April next year.

Updated on: May 26, 2011, 20:43:37 IST

Hindustan Times | By Chetan Chauhan, New Delhi

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To check fuel adulteration and ensure poor get the benefit, the government intends to transfer the subsidy amount for kerosene directly to around 40 crore poor from April next year.

The fuel subsidy burden on the government in 2010-11 was Rs 38,336 crore in the last financial year of which about Rs 16,000 crore was meant for providing kerosene at subsidized 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 subsidized rate of Rs 12 per litre. 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 headed by Finance Minister of Pranab Mukerjee for direct cash transfer.

The government intends to introduce the new regime from April 2012 and sought EGoMs approval for the same. The petroleum ministry has also sought financial incentives for the states to set up an institutional mechanism to undertake transfer of cash subsidy before end of March 2012, the proposal says.

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. Kerosene will be available at the existing fair price shops and the poor will get it at the existing subsidized price after the money will be deducted from her smart card. The monthly quota ranges between 10-14 litres per family in different states.

The work for introducing the regime has already started in states such as Haryana and Andhra Pradesh, where smart cards have been introduced for availing subsidized goods from the fair price shops. “These smart cards will have Aadhaar numbers to prevent any leakages,” a senior government official said.

After kerosene, the government plans to introduce direct cash transfer of subsidy for food grains available under the public distribution system. A committee headed by plan panel deputy chairperson Montek Singh Ahluwalia has already submitted report recommending the mechanism for direct cash transfer to the poor, similar to the one for kerosene.

Two government committees —headed by C. Rangarajan in 2006 and by B.K. Chaturvedi Committee in 2008— had recommended that subsidised kerosene be supplied only to the poor families and it should be direct cash transfer.

As per government reports, over 40 percent of kerosene meant for poor is pilfered for either sale in open market or petrol adulteration, especially in Punjab, Maharashtra, Chhattisgarh and Uttar Pradesh.

ABOUT THE AUTHOR
Chetan Chauhan
Chetan Chauhan is the National Affairs Editor looking into all aspects of news and features from across India. A Chevening scholar with over three decades of experience in reporting and news management, Chetan has extensively covered all important aspects of the social sector, political economy, environment and climate change nationally and internationally. He did a journalism course at the Reuters Institute of Journalism in Oxford and Digital Media training at Nanyang Technological University in Singapore. He started as a reporter with The Statesman in 1996 and joined the Hindustan Times in 2000 in the metro bureau covering environment, crime and Delhi politics. He covered hot local news, from the Jessica Lal murder case to the rebellion of Delhi Congress MLAs against then Chief Minister Sheila Dikshit, to the replacement of toxic vehicle fuel with cleaner compressed natural gas (CNG) in the national capital. Some of his stories on air pollution became part of the Supreme Court’s landmark MC Mehta versus Government of India case in the National Capital Region (NCR), forcing the government to take corrective measures. As part of the national political bureau since 2004, he covered important central sectors such as environment, education, social justice, labour, rural development, water resources, renewable energy, agriculture, broadcasting and the Planning Commission for more than a decade producing several exclusive and investigative breaking stories. His specialisation is the environment, having covered at least a dozen United Nations global conferences on climate change, biodiversity and wildlife including climate summits in Paris, Copenhagen and Bali. He also covered India’s two five-year plans ---11th and 12th and reported on drafting and execution of right based laws such as Right to Education, Right to Information and rural job guarantee law, MG-NREGA, now being introduced in new format as VG-RAM-G Act. He has in-depth knowledge of social sector issues. He was one of the first to report on tigers vanishing from Sariska and Panna wildlife reserves in 2004 and 2008, respectively, leading to the setting up of the National Tiger Conservation Authority (NTCA) and the introduction of stringent penal provisions for poaching. He has written extensively on the rising human-animal conflict in India and the degradation of India’s biodiversity hotspots because of mining and other activities. Since 2004, Chetan has covered Parliament comprehensively and participated in training on the nuanced coverage of Parliament proceedings. He has travelled extensively across India to cover national and provincial elections since 1998, especially in the Hindi heartland states, considered India’s road to power. He writes a regular column for Hindustan Times, Ecostani, on important national politics, economy, Himalayan ecology and environmental issues. His other responsibilities include providing inputs for edits and edit page articles for the publication, apart from managing news flow from across India.Read More

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