The government has been taking a slew of mutually contradictory steps on LPG. The public is confused.
Ever since it signed the GATT agreement in 1994, India has been promising the world that it would remove all oil subsidies including the subsidy on domestic LPG. Maybe it is a lack of willpower, but every time it takes a decision on the issue, it seems to be taking one step forward and then two steps backwards. Thus LPG subsidy still continues eighteen years after the GATT agreement.
The government announced some time ago that the number of subsidized cylinders has been limited to six per household per year. This gave rise to a wave of protests and several states have announced higher limits. Now the central government itself is considering increasing the number to nine or even twelve per year.
The government recently made a "one household, one connection" announcement and as a result, thousands of households which had more than one LPG connection, surrendered the additional connections. But the Ministry of Petroleum and Natural Gas has just announced new norms according to which, the household can retain additional connections, but the household can enjoy the benefit of only six subsidized cylinders on one connection and the full price has to be paid on additional cylinders on that connection and any cylinder on other connections. If the norms had been announced earlier, it would have saved thousands of families the hassle of surrendering their additional connections.
It was announced some time ago that all LPG consumers should pay the full price on any cylinder that is delivered to their household and that the LPG subsidy for which they are eligible will be directly credited to their bank accounts. To receive this credit, the consumers were supposed to go to the bank with a copy of the Aadhaar card and get their accounts "Aadhaar-enabled". Many people have already done so. But the government seems to be dragging its feet on the scheme and it has not yet been implemented. It is surprising that some banks are not even aware of "Aadhaar- enabling" of customer accounts.
To prevent diversion of cylinders, the government introduced the LPG customer card and the number of the delivered cylinder was supposed to be written on it. The delivery boy was supposed to check the number on the empty cylinder and make sure that it matched the previous entry on the customer card. This procedure would track each cylinder and hence put an end to diversion. But no one monitored these cards and black marketing of cylinders flourished. Now, again to prevent LPG cylinder diversion, the government has introduced mobile and internet booking of cylinders. In Mysore, for HP dealers, one can no longer book a cylinder by calling or visiting the dealer. This system is supposed to make the booking foolproof and diversion of cylinders by the dealers impossible.
But if the gap between two bookings exceeds 6 months, the gas connection is automatically blocked and the consumer has to go through an elaborate ritual to get the connection unblocked. There are many households in which there are only one or two persons (especially elderly people) and if they visit their children for any length of time, the gap between gas bookings will exceed 6 months and they will have to go through the cumbersome process of unblocking their connection. When asked why consumers are being thus harassed, oil company officials reply that it is to prevent unlawful diversion of LPG. This is a contradictory stance. On the one hand, they say that on-line and mobile bookings will prevent LPG diversion and on the other hand they say that it is not enough to prevent diversion and still more procedure is required!
When pressed for a solution to this problem, we were told to book a cylinder once in three months and then refuse to take delivery. This procedure may succeed in keeping the connection unblocked, but it will allow the dealer to sell the cylinder in black market!
The government is spending about Rs. 35,000 crores every year in LPG subsidy. Since the price of a subsidized domestic cylinder is about Rs. 410 and the price of an unsubsidized cylinder is about Rs. 900, the huge difference in the prices is a heavy incentive for black marketing. It is estimated that more than 30% of the domestic cylinders are diverted to the black market. It means that more than Rs. 10,000 crores of government subsidy ends up in undeserving hands.
With such a huge loss to the government, one would expect it to be a little more industrious in putting a stop to LPG diversion. It is clear that any decent scheme would cut the diversion drastically if implemented properly. Instead of doing it, the government is bringing on one scheme after the other without implementing any of them properly. This is not just confusing, but a hassle to the public. On top of it, diversion of cylinders continues. The end to this confusion is nowhere in sight.
Dwarkanath Narayan, Mysore Grahakara Parishat
