Govt suspends LPG subsidy transfer scheme; hikes cylinder quota from 9 to 12

Government had initially capped the supply of subsidised domestic LPG cylinders to six per household in a year in September 2012.

New Delhi | Updated: January 30, 2014 7:10:04 pm
Hike in the subsidised LPG quota will cost Rs 5,000 crore more to the exchequer. (PTI) Hike in the subsidised LPG quota will cost Rs 5,000 crore more to the exchequer. (PTI)

Government on Thursday raised the quota of subsidised cooking gas from 9 to 12 cylinders per household in a year as demanded by Rahul Gandhi even as it suspended operation of UPA’s game-changer’ scheme to pay LPG subsidy in cash to consumers directly.

Announcing the decision taken by the Cabinet Committee on Political Affairs, Oil Minister M Veerappa Moily said raising the quota of subsidised LPG to 12 cylinders from nine at present, will cost Rs 5,000 crore in additional subsidy annually.

At the AICC meeting in Delhi a fortnight ago, Rahul Gandhi had demanded raising the LPG cap telling Prime Minister Manmohan Singh that “nine cylinders are not enough” putting pressure on the government.

After today’s decision, households will get one cylinder extra, on top of the quota of 9 cylinders, in February and  March in the current financial year.  From the next fiscal beginning April,  they will be entitled for 12 cylinders-one per month-at subsidised rates.

Currently, a subsidised LPG cylinder costs Rs 414 in Delhi while the market price, which consumers pay for any demand beyond the quota, comes to Rs 1,241.

The direct benefit transfer for LPG (DBTL) scheme, under which consumers in 289 districts in 18 states got cash of Rs 435 in their bank accounts so that they could buy cooking gas at market rate, has been put on hold because many complained that they were not get the benefit in absence of either an Aadhaar card or a bank account linked Aadhaar.

DBTL was touted by the UPA government as game-changer as it plugged diversions and helped subsidy reach the intended beneficiaries.

“There were certain issues on implementation on the ground because at places the seeding between Aadhaar number and bank account was not completed. Therefore to ensure that customers are not at inconvenience in the interim it has been decided that a committee will be constituted which will review only the implementation of DBTL. Pending the review, consumer will get subsidised cylinders as he was getting earlier,” he said.

After the suspension, the government will pay subsidy to oil companies as was the practice before and consumer will get subsidised cooking gas from them.

“It is not admission of failure on the part of the scheme and we are quiet proud and happy that this programme has gone on very well. Even if there is a marginal error, we need to correct it. We don’t want to proceed further so we have to go back on the reforms measure,” Moily said.

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