January 30, 2014

Cooking gas limit raised to 12 cylinders; Aadhaar game is off for now

The Centre has announced on the eve of general elections that from April 1 the annual eligibility will be 12 subsidised cylinders instead of the present 9 and suspended the Aadhaar-linked Direct Benefit Transfer scheme for cooking gas subsidy, widely criticised by the consumers as one of the most deliberately confusing operations by the oil babus with ulterior motive.
New Delhi: The Union Cabinet on Thursday approved the proposal to raise the number of subsidised cooking gas cylinders from the present 9 to 12. Announcing the decision, Petroleum Minister Veerappa Moily said the Direct Benefit Transfer scheme for LPG subsidy by linking Aadhaar number to bank account is also suspended forthwith. He said there were complaints about the scheme and a probe is being conducted.

Congress vice-president Rahul Gandhi had demanded at the All India Congress Committee meeting on January 17 that the LPG limit should raised and that the women of the country need it. Soon after the Government had conceded the demand in principle.

One cylinder per month - yet another confusion!

The Minister clarified that in addition to the entitlement of 9 subsidised LPG cylinders a financial year as per the existing quota, consumers will get one cylinder each for February and March of the current year and 12 cylinders in the next financial year beginning April 1. He also said the new eligibility from April 1 will be one cylinder per month but how this works smoothly has not been clarified.

The Minsiter said, “the total sale of cylinders with subsidy would come to 95.29 cr cylinders and the total annual subsidy burden at the rate of Rs 800 per cylinder will come to Rs 80,000 crore.” He said the present raise in the number of subsidised cylinders will cost the exchequer an additional Rs 5,000 annually. The raise will cover 97% of the population instead of the present 87%.

What does RBI Governor Raghuram Rajan say

The market price of a standard gas cylinder of 14.2 kg of LPG is set at Rs 1,258 and the subsidized LPG is computed to cost Rs 414 per cylinder at present in Delhi by the Government's oil companies.

Meanwhile, Reserve Bank of India Governor Raghuram Rajan, scratching the surface, told a TV channel, these are "misdirected subsidies” and that “we have to be very careful because we need to spend on very important things we are not spending on.” However, he did say that subsidy will be helpful for a certain number of people.

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