Tuesday, October 13, 2015

8922 - Ghost savings: Government's estimated savings under DBTL fall short by just 98.87%! - Money Life


MONEYLIFE DIGITAL TEAM | 07/10/2015 02:34 PM |  

The government’s most recent and much-publicised estimate shows savings of Rs12,700 crore due to reduced LPG subsidy. However, analysis done by IISD, using publicly available data, reveals maximum potential savings of Rs143.4 crore or just above 1% for FY2015

From 1 April 2015, the Central Government is distributing subsidy for liquefied petroleum gas scheme through direct benefit transfer (DBTL or PAHAL). Importantly, DBTL does not remove the LPG subsidy, but simply changes the mechanism by which it is delivered. There is a series of statements and media briefings by government and oil company representatives about humongous savings through the DBTL scheme. The recent one from the Chief Economic Advisor claims an estimated savings of Rs12,700 crore from the scheme. However, an analysis done by International Institute for Sustainable Development (IISD) shows that the Government's well-publicised fiscal savings figures are likely to be large overestimates and fall short by almost 99% or Rs12,557 crore.