Government decided to cap LPG subsidy - Fusion - WeRIndia

Taxpayers who are earning over Rs.10 lakh per annum will no longer get subsidized LPG from January, 2016 onwards. The government yesterday decided to cap the subsidy cylinders. Currently, each and every household gets 12 subsidy cylinders of 14.2-kg each at the rate of Rs.419.26. And the market price of this cylinder is Rs.608.

Earlier the government asked people to give up LPG subsidy voluntarily to which 57.5 lakh LPG consumers out of around 15 crore responded and gave up their subsidy.

The Oil Ministry felt that consumers in the higher income bracket should get LPG cylinders at the market price since they can afford it. In this context, the subsidy should reach only the consumers who cannot afford the market prices of the cylinders. Hence, it was decided to cut the subsidy to the LPG consumers who are earning more than Rs.10 lakh per annum. This is applicable “if the consumer or his/her spouse had taxable income of over Rs.10 lakh during the previous financial year computed as per the Income Tax Act, 1961.” Yet, initially it would be done on self-declaration basis at the time of cylinder booking from January 2016 onwards.

The subsidy expenditure on LPG was Rs 40,551 crore in 2014-15. The subsidy will be less than half this fiscal year due to constant slumping in oil prices. The subsidy payout for the period of April to September, 2015 was Rs.8,814 crore. At present, there is no proper information of LPG customers that have a taxable income of Rs.10 lakh or more. The Direct Benefit Transfer helped the government in eliminating inactive and duplicate customers and now there are 14.78 crore LPG consumers. And 57.50 lakh LPG consumers had given up their subsidy in response to the Prime Minister’s call of voluntary giving up of LPG.

The Oil Ministry statement says that the main objective of the government is to make sure that the subsidy reached targeted groups. The subsidy saved due to ‘GiveitUp’ campaign is being used to give new connections to BPL families.

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