Finance Minister Pranab Mukherjee has announced the gradual roll out of a scheme that would make people pay market rates for LPG cylinders and then receive partial payments in their accounts depending on the subsidy they are eligible for.
The scheme is already active in a district in Mysore in Karnataka, Mukherjee told the Lok Sabha in his budget speech today.
It will gradually be rolled out in 50 districts in the next 6 months, he said.
The scheme is also being tested for the sale of kerosene in Alwar, Rajasthan.
The scheme would allow direct transfer of subsidies to the people who need it most and allow the government wasteful expenditure on subsidies, the Finance Minister said.
Under the scheme customers would be required to pay the full market rate of LPG cylinders as fixed by the oil marketing company. After the payment, it is checked what level of subsidy the person is eligible depending on income levels.
Accordingly, the money would be returned to the consumers in their bank accounts. However the scheme is dependent on the Aadhar scheme under which each person receives a unique identification number.
133 million Aadhaar numbers have been distributed so far and the government plans to to issue 600 million unique IDs by 2014. Bankers have already cited possible problems with transferring the funds given what they say are unsuitable procedures to verify the identities of the bank account holders under 'Know Your Customer' (KYC) norms.
more in Budget