NEW DELHI: The direct benefit transfer scheme is described as a ‘game changer’ that has reduced sales of subsidised domestic cylinders by about 25 per cent as most ‘ghost beneficiaries’ have been eliminated, Arvind Subramanian, Chief Economic Advisor said here on Thursday.
Speaking at the UNDP conference, Subramanian said, “We estimate that in 2014-15, savings could be as much Rs 12,700 crore, which is a lot of money. But savings will be lower this year at around Rs 6,500 crore.”
Under PAHAL, earlier known as DBT, domestic cylinders are sold at market rates and consumers get the subsidy directly in their bank accounts. This is done either through an Aadhaar or a bank account linkage. Pahal looks to cut down diversion and eliminate duplicate or bogus LPG connections.
However, Subramanian, cautioned that the government should make sure genuine beneficiaries are not excluded. He added that because of schemes like Pahal, Jan Dhan and Aadhaar, institutional arrangement has improved.
Subramanian said DBT could have been even more valuable “had our tax system been a little bit more rational.”
“The price gap between commercial sales and non-subsidised domestic sales of LPG is 32 per cent. A big chunk of it is taxes. The Centre imposes 5 per cent customs and 8 per cent excise duty, and states on an average impose 13 percent tax on commercial LPG,” he added.
Cautioning against extending the DBT scheme, he said, “In case of kerosene, a user is less literate and lives in remote areas. The last-mile connectivity problems become much more problematic.”