Following a meeting with Congress MPs who called on him to demand that the number of subsidised LPG cylinders for consumers be increased from nine to 12 per annum, Union Petroleum Minister M. Veerappa Moily on Friday assured that his ministry would “seriously consider” the demand.
The Congress MPs P.C. Chacko, Mahabal Mishra and Sanjay Nirupam said there was an urgent need to increase the subsidy to 12 cylinders as the consumers have already used up their nine cylinders for the year and now from this month they will have to pay Rs. 1241 instead of Rs. 450 for every cylinder (both prices are of New Delhi).
Mr. Mishra also criticised the recent hike of Rs. 220 per cylinder. However, Mr. Moily defended it saying the amount of subsidy has not been reduced.
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The MPs also demanded that the linkage of the subsidy to Aadhar-linked ECS accounts be done away with as not all consumers have such cards or accounts.
Addressing the concerns raised by party MPs, the Minister also spelt out the economic consideration which had compelled the government to restrict the supply of subsidised cylinders to the nearly 15 crore LPG consumers in the country.
“About 73-75 per cent of all petroleum products, including LPG are imported by the country and the price of these products is determined by the OPEC countries and the Middle East without any consideration to the paying capacity of the consumers,” he said.
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Pointing out that the government has been granting huge subsidy to lower the burden on the consumers, Mr. Moily said it is also a fact that the money for subsidy has to be got through other taxes.
The Minister explained that the rates have to be revised as money is needed to pay the oil bill. “We have to pay in dollars or else we will be blacklisted and face further problems related to supply,” he cautioned.
Also, Mr. Moily said, money is needed for undertaking both downstream and offshore exploration. “If we do not generate funds, we will not have investible funds for exploration and will have to borrow more.”
The Minister also pointed to leakages in the subsidy and called for better management. Out of the consumers, he noted that about “four to five crore may not exist” and yet the government has been losing between Rs 8,000 crore and Rs 10,000 due to them.”
It was for this reason that the Aadhar linked electronic transfer of subsidy was introduced, he said, adding that it has covered nearly 85 per cent of the consumers. “People should realize that this (linkage) was in the best interest of the consumers and country. We do not want to give subsidy to people who do not deserve it.”
On increasing the number of subsidised cylinders per consumer, the Minister said “the issue would need to be taken to the Cabinet Committee on Political Affairs and we hope the Prime Minister and Finance Minister will appreciate it.”
As for the current subsidy, Mr. Moily said on average about seven-eight cylinders are consumed per annum on average by a consumer and the nine cylinders being provided cover 90 per cent of the targeted consumers. Another cylinder would increase the reach to 95 per cent.