Friday, January 31, 2014

Govt raises cheap LPG cap to 12 cylinders, delinks fuel subsidy from Aadhaar

The increased supply, being implemented on Rahul Gandhi’s directive, would raise the government’s subsidy burden by Rs 5,000 crore.The government has raised the supply of cheap cooking gas cylinders to 12 per year from nine, and de-linked subsidy on the fuel from Aadhaar cards, reversing major reforms ahead of the elections and delivering a blow to the personal identification scheme championed by software billionaire Nandan Nilekani

The increased supply, being implemented onCongress Vice-President Rahul Gandhi's directive, would raise the government's subsidy burden by Rs 5,000 crore while the suspension of Aadhaar-linked payments can revive large scale diversion of cheap fuel for commercial use. 

The government has already spent Rs 3,500 crore on the Aadhaar scheme being implemented by the Nilekani-headed Unique Identification Authority of India ( UIDAI). It has showcased the scheme as a game-changer for effective governance and targeteddelivery of services and subsidies, and Nilekani is expected to contest the forthcoming elections on a Congress ticket. 

Earlier this month, Rahul Gandhi had described Aadhaar as a major initiative against corruption. However, despite the high-profile campaign about the scheme's merits, many Congress leaders complained that asking a customer to first buy gas cylinders at market price and then paying the subsidy into the person's bank account was complicated.

Many customers do not have Aadhaar cards, and those already enrolled would have been happier if they got the subsidy before buying the cylinder at market rates. Further, some dealers were struggling to adapt to the new system, causing supply disruptions. 

"We don't want even a single consumer to suffer due to implementation problems. We will fine-tune the system," Petroleum Minister Veerappa Moily told reporters. 

Moily was interacting with reporters after the announcement that the Cabinet Committee on Economic Affairs had suspended the most high profile use of Aadhaar cards — the direct benefit transfer for LPG (DBTL) scheme — until a committee reviews it. Analysts said this clearly indicated a rethink about the scheme. The oil ministry initially resisted calls to ease restrictions on subsidised cooking gas supply, but Moily's party colleagues persuaded him to change his stand after Congress' rout in recent assembly elections in four states. 

The launch of the scheme last year had rattled consumers, who complained that cooking gas dealers were selling cylinders in the black market while genuine customers were stranded with no fuel in their kitchens. The direct cash transfer of subsidy to bank accounts of consumers was launched in June last year. Congress leaders had boasted that the scheme would boost the party's prospects in this year's general elections. 

But the unpopularity of the scheme forced a rethink after 9.5 crore consumers in 291 districts had been covered. Speaking at the press conference to announce the decision, Information & Broadcasting Minister Manish Tewari said the decision to raise the cap on the supply of subsidised cylinders was taken at the direction of Rahul Gandhi. 

"Rahulji bhi janata ka netretiva karte hain aur unki baton ko gambhirta se liya jata hai (Rahul also leads the people and his views are taken seriously)," he said. Moily said consumers who had exhausted their quota of nine cylinders would get two more subsidised cylinders by March 31. "From April 1, consumers will get one subsidised cylinder per month and they can purchase cylinders as they used to do before the DBTL was launched," he said. 

"The Cabinet has decided to set up a committee to review implementation of DBTL. Based on its report, the government will improve the scheme," he said. Cooking gas dealers said with the Aadhaar system under review, they would have to design a new mechanism for the sale of cylinders at subsidised price. 

This, the dealers fear, would lead to a supply backlog of around 15-20 days, especially in areas where it was launched recently, such as Delhi. 

"We have been facing problems in executing Aadhaar-based LPG delivery for the past two years and now with elections around the corner, the government is rectifying all its past wrong decisions," said a New Delhi-based dealer requesting anonymity.

Sourcec : Economics Times

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