Conflicting figures of savings LPG subsidy

The main Opposition Congress on Tuesday criticised the government for misinformation for claiming having saved Rs 23,316.12 crore for over past two years through Direct Benefits Transfer (DFT) scheme for LPG subsidy. The CAG report as tabled in the Parliament has said the scheme had yielded a saving of mere Rs 1,764 crore. 

The Prime Minister during his Independence Day address last year had put the saving figures at Rs 15,000 crore during 2014-15. The Finance Minister Arun Jaitly put the figures at Rs 14,672 crore while replying a question in Rajya Sabha, but in Lok Sabha Minister of Petroleum and Natural Gas Dharmendra Pradhan put the figures at Rs 11,640 crore. Chief Economic Advisor Arvind Subramaniam on July 2015 claimed a saving of Rs 12,700 crore in 2014-15.

The Pratyaksh Hastantrit Labh Yojana (PAHAL DBTL) Scheme) was introduced by the Central government in November 2014 for transfer of subsidy on LPG directly to the consumers linking their Aadhaar Number, Bank account and LPG Consumer ID. The Scheme involves 16.17 crore domestic LPG consumers serviced by 16,781 LPG distributors of the three Oil Marketing Companies. Indian Oil Corporation Ltd (IOCL) considered the average subsidy rate in 2014-15 while working out the subsidy savings for 2015-16. This has led to an over-statement of savings in subsidy, in view of the sharp fall in prices in 2015-16 vis-à-vis 2014-15. 

The CAG report says the saving on the LPG subsidy paid directly to the consumer is only Rs 1,764 crore, only about 15% of what the government had claimed as bulk of the savings were actually due to sharp fall in the global prices.

Yes, the government saved a total of Rs 23,316.12 crore in subsidy, but as much as Rs 21,552.8 crore of it was on account of fall in crude oil price in the global markets, the CAG said, putting on record that "the actual subsidy payout during the period from April 2015 to December 2015 was Rs 12,084.24 crore as against Rs 35,400.46 crore during the same period in 2014."

Under DBT, the subsidy is directly paid into bank accounts of the consumer, thereby eliminating duplicate and fake connections and diversions for non-domestic use. The government had claimed saving of Rs 14,818.4 crore during 2014-15 due to the DBT eliminating fake, duplicate and ghost consumers while the CAG found the real saving was not even Rs 1800 crore.

What they said

July 2nd 2015: "The government's Direct Benefits Transfer (DBT) scheme for LPG subsidy had yielded a saving of Rs 12,700 crore in 2014-15” – Chief Economic Advisor Arvind Subramaniam at a conference in New Delhi.

August 10, 2015: "The amount of LPS subsidy saved during the year 2014-15 was Rs.11,640 crores due to the implementation of the Direct Benefits Transfer scheme” – Minister of Petroleum & Natural Gas Dharmendra Pradhan in the Lok Sabha.

August 15, 2015: "We brought Direct Benefits Transfer scheme for LPG subsidy and helped save Rs.15000 crores every year” – Prime Minister Narendra Modiat his Independence Day speech from the Red Fort.

March 16, 2016: "The Direct Benefits Transfer scheme has saved Rs.14672 crores in LPG subsidy for the year 2014-15” – Finance Minister Arun Jaitley in Rajya Sabha.