Explained: Plugging leakages

Newsline explains what subsidy means to a middle class family and how subsidy scheme works.

Written by Dipti Singh | Mumbai | Updated: April 13, 2015 1:01:40 am


How does the subsidy benefit you?

Currently, the actual price for a 14.2 kg standard cylinder in Mumbai is Rs 632. But a subsidised cylinder costs Rs 452. The difference of Rs 180 may not be much. But international LPG prices can fluctuate. In January 2014, the non-subsidised cylinder rose to Rs 1,273. For a family that uses one cylinder a month, the extra annual cost in absence of a subsidy would have been as high as Rs 10,080.

How does the scheme work?

Till very recently (and even now in some parts of the country), the government charged only the subsidised price to LPG consumers. They would release the subsidy payment to state-owned oil companies or simply ask them to bear part of the burden. This was an inefficient solution and failed to reach the genuine beneficiaries. Misuse was rampant with commercial establishments using subsidised cooking gas. That is why the government started a cash transfer scheme called Direct Benefit Transfer of LPG (DBTL) scheme, which could give subsidies in a targeted manner. When this scheme is fully rolled out, consumers will pay the actual non-subsidised price for an LPG cylinder and they will get the subsidy in their bank accounts that will be linked with Aadhaar.

Is piped natural gas (PNG) cheaper than LPG?

PNG prices currently are lower than even subsidised LPG cylinders. For instance 14.2 kg LPG is equivalent to approximately 15.5 units of natural gas shown in your meter. Considering the subsidised LPG price of
Rs 452 in Mumbai, you consume PNG costing Rs 417. DIPTI SINGH

For all the latest Explained News, download Indian Express App