EGoM to discuss report on direct cash subsidies

An Empowered Group of Ministers (EGoM), headed by Finance Minister Pranab Mukherjee, is likely to meet on Tuesday to discuss the report prepared by the task force on direct transfer of cash subsidies on kerosene, LPG and fertilizers.

Although no agenda has been outlined for the meeting, it is likely that the recently submitted report of the task force, which is headed by Unique Identification Authority of India chairman Nandan Nilekani, will be taken up.

If the report is approved by the EGoM and sent to the Union Cabinet, the government's subsidy burden could be brought down substantially. Under the proposed scheme of things, every household would get only 4 to 6 LPG cylinders at the subsidised price of Rs.395.35 here and would have to pay, for any requirement beyond that, a market price of about Rs.710 per cylinder.

The limited supply of subsidised LPG would be for those who owned a car, two-wheeler, house, or figured in the income-tax list. Each 14.2-kg cylinder of LPG normally lasts a household 45-60 days; anything between 4 to 6 cylinders would be adequate for a year for the normal household.

According to LPG distributors' records, a vast number of households were taking as many as 20 to 30 cylinders each year — indicative of large-scale diversion of subsidised cooking gas for use in commercial establishments such as restaurants and dhabas, and as auto fuel.

LPG for commercial use is sold at the market price and packed in different cylinders. The recent report had also proposed that the difference between the current retail price and the actual market price be paid to BPL cardholders directly in cash through banks or ATMs. This would be delivered through the unique identification number, Aadhar.

For kerosene, the task force has suggested that the poor get direct subsidy transfer. The EGoM is likely to launch pilot projects to test the effect of direct transfer of cash subsidy to the targeted populations in a few States.

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