A massive cut in petroleum subsidy in the Budget 2021-22 is likely to hit about 20 crore consumers entitled to get cooking gas subsidy under the direct benefit transfer (DBT) scheme.
The government had started transferring a subsidy of Rs 563 per cylinder to beneficiary accounts directly in 2015. The price of the cooking gas cylinder was Rs 998 back then. The latest data of December 2020 shows the subsidy amount has been reduced to less than Rs 20. The price of a domestic LPG cylinder hovered around Rs 700 in December last year.
Under the DBT scheme, the government provides subsidy on 12 cylinders to a household in a year. India has about 28 crore LPG consumers. Out of these, about 1.5 crore are not entitled to the subsidy because their annual taxable income is above Rs 10 lakh. While consumers buy cooking gas at market rates, the subsidy amount is transferred directly into their accounts.
The Union Budget reduced allocation for petroleum subsidy to Rs 12,995 crore for 2021-22 from Rs 40,915 crore in the previous year. The reduction in petroleum subsidy, which is mainly meant for cooking gas and kerosene, is expected to majorly impact cooking gas subsidy this year because the government is expected to use the money mainly on the Ujjwala scheme, to which it wants to add one crore more beneficiaries this year, an official told DH.
The Ujjwala scheme provides subsidised LPG gas connection and cylinder to people from economically backward sections. It caters to eight crore beneficiaries at present.
The scheme was launched by the NDA government in its first term to promote clean energy and dissuade people from relying on traditional sources of energy such as cow dung cakes. Subsequent research, however, found that Ujjwala beneficiaries, especially in villages, had stopped getting their cylinders refilled regularly due to high price.
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In fact, from May to September last year, the government did not make any cash transfers into the accounts of beneficiaries of cooking gas subsidy but the price of 14.2 kg cooking gas hovered around Rs 600.
