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DBT on Kerosene Subsidy to benefit the Needy Only

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DBT on Kerosene Subsidy to benefit the Needy Only

Total kerosene consumption in India for the year 2011-2012 recorded 7.13 million kilo liter, as per the National sample survey. This is a cumulative consumption of kerosene in open market and PDS kerosene. For the year 2015-2016, 8.685 million kiloliters of subsidized kerosene has be allocated to various state. This is despite the consumption of kerosene declining in the recent years. This is much higher than the kerosene being consumed as house hold. This exemplifies that part of the allocated subsidized household kerosene is being diverted to illegitimate purposes. We also notice that, in the recent part the power supplies in the rural area has been drastically increasing leading to fall of kerosene consumption in the rural areas of India. Around 4.5 million of LPG connections has been allocated under the Give-Back” scheme, for the financial poor people of the India n Society. Such measure have drastically reduced the consumption of kerosene that was frequently used in large magnitude for both lighting and cooking. The cummulative subsidy on kerosene for the  fiscal 2014-15 was recorded as Rs 24,799 crore.

The DBT (Direct Benefit Transfer) was introduced to ensure that the subsidy  has reached in legitimate hands rather than illicit deviation.  Various states spread across the nation have opted to implement DBT in kerosene in selected districts in their state. Some of the states that are keen in implementing the DBT in various districts of the states are:

Sno State District
 01 Chhattisgarh  
Raipur, Durg, Bilaspur
 02 Haryana  
Panipat, Panchkula
 03 Himachal Pradesh Shimla, Solan and Una
 04 Jharkhand
Chhatra, Giridih, East Singbhum, Hazaribagh, Jamtara and Khunti
 05 Madhya Pradesh Hoshangabad, Harda, Khandwa, Burhanpur
 06 Maharashtra    Amaravati, Latur
 07 Punjab    Taran Taran, Pathankot and Mohali
 08  Rajasthan   Pali, Jhunjhunu, Kota
   
 

Under the DBT, the user/consumer will pay the actual price of kerosene ( no subsidy applicable) at the time of purchase.  The subsidized amount will be credited into the user bank account of the beneficiary. Furthermore to avoid any hassles to the beneficiary while paying the actual price ( without subsidy), the subsidy  will be credited  upfront to eligible beneficiaries during the initial purchase.

State incentives to expedite DBT

Incentives has been declared for the States and Union Territories, to expedite the implementation of DBT in various States and Union Territories on India. The States and Union Territories will be offered cash incentive of the saving from the subsidy. The incentives as as per following table for various years

Sno Year Incentive offerd to States/UTs on Saving From subsidy
01 First Year
75% of the saving
02 Second Year 75% of the saving
03 Third Year 50% of the saving
04 Fourth Year 25% of the saving

In case, the States voluntarily agree to undertake cuts in kerosene allocation, beyond the savings due to DBT, a similar incentive will be given to those States/UTs.  The calculation will be based on net savings in kerosene consumption at State level from the baseline.  The baseline for calculation of savings shall be 90% of the 2015-16 allocation.

The scheme is effective from 01-April-2016, as the date on which this scheme will be implemented in various States/UTs. Till implementation date of the scheme the State government will be regularly consulted as a pre operational stage of the scheme. Post implemention of the scheme a detail review of the scheme will be conducted after 3 months of implementation of this scheme.



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