Plugging LPG subsidy leaks leads to Rs 21,000 crore savings

NEW DELHI: As many as 3.3 crore fake, ghost and duplicate LPG connections have been blocked, leading to saving of Rs 21,000 crore in subsidies, said oil minister Dharmendra Pradhan.

"When we assumed office (in 2014), we had a system of misdirected subsidies, rich and upper middle class were entitled to LPG subsidies. There were many duplicate connections and the subsidised LPG was diverted to commercial and industrial segments," he said, addressing the Asia LPG Summit organized by World LPG Association here.

As a result poorest of the poor never had access to LPG. In 2014, almost half of Indian households didn't have LPG connections.

Pradhan said the Direct Benefit Transfer of LPG was launched in 2014 wherein subsidy was directly paid into the bank accounts of the beneficiaries.

"This made the process transparent and plugged the subsidy leakages which was otherwise being misused through ghost accounts," he said.

The scheme is benefiting over 176 million consumers and over Rs 40,000 crore or $6.5 billion of subsidy has been transferred directly to the beneficiaries bank accounts in the last two years.

"It has also resulted in estimated saving of over Rs 21,000 crore or $3.2 billion in two years to the government," he said.

Pradhan said an intensive exercise was also carried out for identifying duplicate, fake, ghost and inactive domestic LPG connections. As on April 1, 2015, 33.4 million connections were identified and blocked, saving Rs 21,000 crore subsidy in 2014-15 and 2015-16.

Also, it has led to sale of commercial LPG, which is based at market price, rising by 39.5 per cent during 2015-16 in contrast to pre-DBT when these sales were not growing at all, he said, adding this was clear evidence that the subsidised residential supply was earlier diverted to commercial.

The minister said 12 million have voluntarily given up subsidies to provide underprivileged access to LPG.

"Nearly 6.3 million new LPG connections have been released to poor (BPL) families in 2015-16," he said, adding in May 2016 Pradhan Mantri Ujjwala Yojana was launched to give free cooking gas connections to poor.

"We have set a target to provide 50 million LPG connections over a period of three years for the poor households, with the budgetary support of Rs 8,000 crore," he said, adding the 15 million target for 2016-17 was achieved in less than 8 months.

Top five states that have benefited as on December 2016, are Uttar Pradesh with 4.6 million connections, West Bengal with 1.9 million, Bihar with 1.9 million, Madhya Pradesh with 1.7 million and Rajasthan with 1.4 million.

"I am confident that we will exceed this target. We have already increased the national LPG coverage to 70 per cent and we may even reach 85 per cent in 2 years," he added.