Fed up of monthly rise in LPG prices? Govt may provide relief as it plans to do away with the practice

In order to put an end to pilferage of LPG subsidy money, Narendra Modi government implemented Direct Benefit Transfer scheme

FP Staff December 28, 2017 16:29:33 IST
Fed up of monthly rise in LPG prices? Govt may provide relief as it plans to do away with the practice

Soon, the Narendra Modi government may do away with the monthly rise in prices of liquefied petroleum gas (LPG) which is used as a cooking fuel in households across the country. Since 1 October, oil marketing companies (OMCs) have not raised the LPG rates, according to a report in Financial Express.

Usually, on day one of every month, state-run oil companies change prices of cooking gas or LPG and aviation turbine fuel (ATF) by taking into consideration average oil price and foreign exchange rate in the previous month.

Fed up of monthly rise in LPG prices Govt may provide relief as it plans to do away with the practice

Image courtesy: Reuters

As part of its plan to raise LPG prices every month, the government initially increased the rates by Rs 2 a cylinder and from May 2017 by Rs 3 every month.

In India, as many as 18.11 crore consumers subscribe to the subsidised cooking gas. Of this, over 3 crore are poor women who get the benefit under the Pradhan Mantri Ujjwala Yojana.

Apart from that, there are 2.66 crore consumers for non-subsidised LPG. Last year, the Centre had instructed oil companies to phase LPG subsidy by March 2018 by increasing prices every month.

The price of subsidised LPG cylinder has gone up by more than Rs 76.51 in 19 installments over the past 17 months. At subsidised rates, every household is entitled to 12 cylinders of 14.2 kg each.

Direct Benefit Transfer scheme

In order to put an end to pilferage of subsidy money, the Narendra Modi government implemented the Direct Benefit Transfer (DBT) scheme. Supply of LPG, like any other populist scheme, was brought under the purview of the DBT.

The DBT programme, a major reform initiative to check graft in welfare funds, was launched by the UPA government on 1 January, 2013. It was aimed at transferring benefits of various central government-run social welfare schemes to the bank accounts of beneficiaries.

Currently, there are 400 schemes under DBT with major components being the MGNREGA and cooking gas subsidy scheme (LPG Pahal). Together, these constitute 50 percent of total DBT transactions this year against 71 percent in last year.

LPG consumers now get the subsidy money deposited directly to their bank accounts. Based on this Firstpost report, the DBT has been a success story for the government.

So far, in the current financial year, the government transferred Rs 84,802 crore in the form of subsidy directly to bank accounts of consumers. Last fiscal, the amount transferred was Rs 74,707 crore and Rs 61,942 in 2015-16 financial year.

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