Direct cash transfer not easy to implement: Petroleum ministry

Weeks ahead of rollout of the direct cash subsidy transfer scheme, the petroleum ministry on Tuesday said the plan will not be easy to implement because of the low base of people with the unique identity Aadhaar cards. The government has identified 51 districts for the rollout of the scheme in the first phase beginning January 1.

Speaking at the 11th Petro India Conference organised by India Energy Forum and Observer Research Foundation, Oil Secretary GC Chaturvedi said direct cash transfer is "a very good concept as will check a lot of pilferage that is currently taking place in marketing of cooking gas (LPG)."

The scheme involves government transferring cash subsidy of Rs520.50 in bank accounts of LPG consumers and asking them to buy their LPG at market price of Rs931 per cylinder. Presently, oil companies sell LPG at subsidised rates of Rs410.50 per cylinder in Delhi and the difference between the cost and price realised is made good by subsidy doleout to them.

This has led to subsidised LPG being diverted to unintended use like commercial establishments who are otherwise supposed to buy gas at market price. "But the cash transfer is not easy as Aadhar penetration is very low. Only 20 crore population has been enrolled for Aadhaar out of the population of 120 crore," he said. "Rolling out direct cash transfer in districts Aadhaar penetration of less than 80-90% will be difficult. We cannot make Aadhaar for cash transfers as the basis in such places."

He said the direct cash transfer for LPG will be first implemented in 20 districts and the remaining 31 districts will be covered in February or March. "Earlier UIDAI had said they will reach 80% penetration in the 31 districts by April but now they say they will expedite the process, so may be in February can be launch the scheme in those districts," he said.

Sources in the petroleum ministry said another hinderance in the rollout of direct cash subsidy transfer scheme is that less than half of the beneficiaries currently have bank accounts. Absence of bank branches in key locations in the districts is one of the reasons for the beneficiaries not having bank accounts.

Also, before issuing LPG subsidy, consumers who hold more than one LPG connection would have to be identified. While it is possible to identify consumers with more than one connection with the same oil company, it is difficult to trace ones who have multiple connections from different companies.

The government had in September decided to restrict supply of subsidised LPG to six cylinders per household in a year. Any requirement above that would have to be purchased at market price.