LPG now will be expensive for some

In line with the Central Government's intention of bringing down the existing Liquified Petroleum Gas (LPG) subsidy, the Ministry of Petroleum and Natural Gas announced on Monday that from January 2016 onwards taxpayers earning over Rs 10 lakh will not be eligible for subsidised LPG cylinders. Earlier this year, Prime Minister Narendra Modi started a campaign– 'Give it up' asking people to give up their subsidy voluntarily.

At present, there are 16.35 crore LPG consumers in the country. The government had earlier successfully implemented the PAHAL scheme for Direct benefit transfer to LPG (DBTL) under which the subsidy is being transferred directly to the bank accounts of 14.78 crore of LPG Consumers eliminating inactive customers, duplication in the rolls and to ensure that the subsidy benefits go to the targeted group.

After the PAHAL scheme under "Give it up" campaign so far 57.50 lakh LPG consumers have opted out of the LPG subsidy voluntarily. Subsidy amount saved from the campaign is being utilised for providing new connections to the Below Poverty Line (BPL) families. This enables the provision of LPG, a clean fuel, to poor households by replacing the conventional fuels such as kerosene, coal, fuel wood, cow dung, etc. relieving the poor of the hardships and health hazards from such fuels.

While many consumers have given up the subsidy voluntarily, it is still just 3.5 per cent of total 16.35 crore LPG consumers. The government felt that consumers in the higher income bracket should get LPG cylinders at the market price. Therefore, it has decided that the benefit of the LPG subsidy will not be available for LPG consumers if the consumer or his/her spouse has a taxable income of more than Rs 10 lakh during the previous financial year.

At present, all households are entitled to get 12 cylinders of 14.2-kg each at a subsidised rate of Rs 419.26, while the market price is Rs 608. During fiscal 2014-15, the subsidy payout on LPG was estimated at Rs 40,551 crore. During April-September this fiscal, the subsidy outgo was Rs 8,814 crore.

The steps taken are showing how the government is willing to make LPG subsidy used for the benefit of the poor. Next, the steps also can be expected from the government like income bracket of taxable income over Rs 10 lakh can be reduced or total income of the house combined exceeding Rs 10 lakh can get exempted from LPG subsidy.

On the contrary, the current initiatives taken by the government can give a boost to the pipe gas line industry as people find it more easy to use LPG if subsidy is exempted.