Direct transfer helps govt save Rs 21,000 crore in LPG subsidy in two years

Government has saved over Rs 21,000 crore in cooking gas LPG subsidy in the last two financial years as paying the dole directly into bank accounts of actual users helped eliminate duplicate connections as well as diversions, Oil Minister Dharmendra Pradhan said.

The government began paying subsidy directly into bank accounts of cooking gas consumers in select districts from November 2014 and in the rest of the country from January 1, 2015.

As on April 1, 2015, there were 18.19 crore registered LPG consumers and 14.85 crore active consumers implying a gap of 3.34 crore consumers which were duplicate, fake or inactive accounts.

"Eliminating such 3.34 crore consumers helped save Rs 14,672 crore in 2014-15 fiscal (year ending March 31, 2015)," Pradhan said at an seminar on subsidies here.

The saving in 2015-16 was about Rs 7,000 crore, lower than the previous fiscal mainly because global oil prices slumped thereby cutting the subsidy required.

"An average of Rs 366 per cylinder subisidy was considered for 2014-15 fiscal," he said. "If we take into account the quota of 12 cylinders per consumer and the average LPG subsidy of Rs 336 per cylinder for the year 2014-15, estimated savings in LPG subsidy due to the blocking of 3.34 crore accounts works out to Rs 14,672 crore, during that year."

The average subsidy in the following year was lower, he said but did not give exact subsidy number.