Govt kills two reforms: raises LPG cap, snaps its Aadhaar link; Rahul Gandhi's wish will cost Rs 5,000 cr

Jan 31 2014, 11:05 IST
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The Cabinet Committee on Political Affairs Thursday granted Rahul Gandhi's wish and raised the annual cap for subsidised cylinders. Reuters The Cabinet Committee on Political Affairs Thursday granted Rahul Gandhi's wish and raised the annual cap for subsidised cylinders. Reuters
SummaryEnsuring subsidised cylinders for 97% of consumers will increase the subsidy burden by Rs 5,000 crore.

The Cabinet Committee on Political Affairs Thursday granted Congress vice-president Rahul Gandhi’s wish and raised the annual cap for subsidised cylinders to 12 from nine, undoing the reformist move to restrict LPG subsidy to deserving families with an eye on elections.

The decision ensures subsidised cylinders for 97 per cent of the consumers and will increase the subsidy burden by Rs 5,000 crore.

The ceiling of nine cylinders took care of the annual consumption of 89.2 per cent of the total 15-crore LPG consumers and only the rest had to buy additional cylinders at market price.

Although the CCPA, prodded by Finance Minister P Chidambaram, agreed to restrict supplies to one cylinder per month to each consumer, sources said this constraint would also be removed as Petroleum Minister M Veerappa Moily later told the Prime Minister that the restriction would amount to rationing.

However, in a setback to a scheme Rahul had touted as a “game changer”, the government put on hold direct transfer of LPG subsidy to the consumer’s Aadhaar-linked bank account. The issue will now be evaluated by a committee.

This decision was taken following arguments by Defence Minister A K Anthony that field trials had shown that the scheme may not be working well as there were families that did not have an Aadhaar card or were unable to open a bank account.

Moily said the direct benefit transfer for LPG (DBTL) scheme, where consumers in 289 districts in 18 states were to get cash in their bank accounts to buy cooking gas at market rates, had invited many consumer complaints.

Although the scheme presently transfers the subsidy to all Aadhaar card-holders, its aim was to eventually provide subsidy only to deserving consumers.

Expecting the objective to be followed through, an expert panel headed by Kirit Parikh had in October recommended that the cap on subsidised cylinders be reduced to six and the DBTL scheme be restricted to identified families based on an “exclusion criteria” within the next one year.

Moily said that following the CCPA decision, each household will get one extra cylinder in February and March and from the next fiscal year beginning April, they will be entitled to 12 cylinders.

Information and Broadcasting Minister Manish Tewari conceded that Rahul’s suggestion about raising the LPG cap had been heeded while taking the decision but it is “not linked to the polls”.

Neither is the decision to temporarily suspend the direct transfer of subsidy

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