Modified cash transfer scheme for LPG to help save Rs10,000 crore in subsidy

Oil minister Dharmendra Pradhan today said the modified cash transfer scheme for LPG launched by the government will help save Rs10,000 crore in annual subsidy.

The cabinet on Saturday decided to re-launch what it said was a modified version of the Direct Benefit Transfer Scheme of the previous UPA government, after it announced deregulation of diesel prices and raised natural gas rates.

Under the scheme, cash subsidy is paid into bank accounts of LPG users so that they can buy the cooking gas refill at market price. Pradhan said the modified scheme will help check diversion of subsidised cooking gas to unintended users as also bring efficiencies in the system.

''It is a way to reduce subsidy (burden)... Rs10,000 crore in LPG subsidy can be saved,'' he said, adding that the scheme will be launched on full-scale by the last quarter of current fiscal.

The projected subsidy savings are on an annualised basis.

Last fiscal, he said, Rs46,458 crore out of a total subsidy burden of Rs138,869 crore was on account of LPG.

Pradhan said the decision to deregulate diesel prices, which resulted in retail rates being cut for the first time since January 2009, was a ''well thought out decision which was taken after considering all aspects.''

''My primary concern is how to protect the interest of consumers... the decision has been tailor made to do so,'' he said.

''The government will not interfere in pricing on a day-to-day basis.''

Petrol price was deregulated or freed from government control in June 2010 and since then it has moved in tandem with market. This has resulted in five reductions in rates in line with falling global trend since August. Cumulatively, rates have been slashed by almost Rs7 a litre in two-and-a-half-months.