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Less Pain, More Gain in LPG Subsidies

Direct benefit transfer scheme is off to a strong start, Rs 41 crore has already been sent to customer accounts

Published: Jul 15, 2013 06:22:37 AM IST
Updated: Jul 11, 2013 05:33:02 PM IST
Less Pain, More Gain in LPG Subsidies
Image: Rupak De Chowdhuri / Reuters

For the direct benefit transfer (DBT) scheme for LPG, well begun is Rs 41-crore worth of the task done. Launched on June 1, the process resulted in that amount getting transferred to the bank accounts of over a million LPG customers within just a week. Oil companies say the numbers are growing every week.

This is great news for the government that paid out Rs 40,000 crore as LPG subsidy in 2012-13. The aim of direct transfer is to pare this down by Rs 8,000-Rs 10,000 crore. The scheme is now operational in 18 districts across 10 states.

How this works:  DBT benefits the ‘below poverty line’ customers who have linked their Aadhaar numbers to their LPG consumer numbers as well as their bank accounts. IndianOil, Hindustan Petroleum and Bharat Petroleum transfer cash directly to their customers’ accounts.

Consumers are paid as soon as they book their first subsidised cylinder, the money getting transferred in advance of the delivery.  

Oil companies are to transfer Rs 9,000 per customer per year; this equals subsidy for nine cylinders. They, in turn, will get reimbursed by the government every quarter. Customers have a grace period of three months, after which the cylinders will be sold to everyone at market price.

(This story appears in the 26 July, 2013 issue of Forbes India. To visit our Archives, click here.)

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