The government is likely to roll out cash transfers for food and kerosene under the public distribution system in three Union territories, including Puducherry, Dadra and Nagar Haveli and Chandigarh in a month’s time even though the direct benefit transfer (DBT) for subsidised cooking gas is estimated to have helped save Rs12,700 crore last year.
“Based on sales and subsidy levels for 2014-15, savings of Rs 12,700 crore are estimated from DBT in LPG,” said Arvind Subramanian, chief economic adviser to the finance ministry on Thursday at a UNDP conference, adding that savings this fiscal are estimated at Rs 6,500 crore due to the lower crude oil prices.
Pointing out that DBT helped reduce subsidy leakage by 25 per cent for cooking gas, he cautioned on extending the model to other items such as kerosene where distribution, consumption and last mile challenges are different.
“In the case of kerosene, a user is less literate and lives in remote areas. The last-mile connectivity problems become much more problematic.”
On rationalisation of food and fertiliser subsidy, Subramanian said, “I think different parts of the government, both individually and collectively, are coming out with ideas.”
However, the government is already working to roll out cash transfers in PDS for food and kerosene in three Union territories in a month’s time. It also plans to introduce biometric identification machines in PDS shops in Daman over the next few months.
While there are no exact estimates on savings through DBT for PDS, it is estimated at about 10 per cent to 15 per cent of the food subsidy bill.
“These are Union territories and so the Centre can go ahead. We have also invited states to identify at least one district where this can be rolled out,” said a senior government official with the DBT Mission.