12841 - Karnataka’s ‘LPG for poor’ scheme sets the stage for chaos and even potential leakage - Financial Express

Karnataka’s ‘LPG for poor’ scheme sets the stage for chaos and even potential leakage

MMABY thus gets pitted against the Union government's Pradhan Mantri Ujjwala Yojana (PMUY). While Karnataka had earlier sought the Centre’s approval for the scheme, the Union government had advised it to run it as a complementary of PMUY and implement it through oil-marketing companies (OMCs) only.

By: The Financial Express | Published: February 19, 2018 6:05 

An election year, in India, is a year of freebies. Parties promise all manner of sops for all sorts of “votebanks”, indulging in reckless populism. (Reuters)

An election year, in India, is a year of freebies. Parties promise all manner of sops for all sorts of “votebanks”, indulging in reckless populism. What, however, is far more concerning is parties in power doing the same. Karnataka goes to the hustings in April-May, and its incumbent Congress government has announced a host of freebies in the last Budget before the polls. Chief minister Siddaramaiah, who also holds the finance portfolio, has allocated Rs 1,350 crore for the Mukhya Mantri Anila Bhagya Yojane (MMABY), which will give free gas connections with twin burner stoves and two refills to 3 million beneficiaries in the state. MMABY thus gets pitted against the Union government’s Pradhan Mantri Ujjwala Yojana (PMUY).
While Karnataka had earlier sought the Centre’s approval for the scheme, the Union government had advised it to run it as a complementary of PMUY and implement it through oil-marketing companies (OMCs) only.

Karnataka had made it clear that the scheme will be implemented through LPG distributors, since this will transparently give data about actual consumption under the scheme. The Siddaramaiah government’s intent behind the scheme—to give the state’s poor an alternative to harmful firewood-burning—is admirable. But the fact is that MMABY will lead to chaos, and ultimately leakages, if there is duplication of connections, thanks to it running in parallel with PMUY. OMC-led disbursal of connections has the advantage of de-duplication since that will mean Aadhaar-linking. The state scheme, on the other hand, is levered on BPL cards, though the state government itself has voiced problems with BPL identification in Karnataka. Moreover, such a culture of freebies creates the hazard of leakages with collusion of the beneficiary—in which case, Aadhaar linking will also be of little avail. This something that the state should avoid in the interest of the taxpayer.

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11727 - How withdrawal of LPG subsidy can raise India's healthcare costs - Business Standard

How withdrawal of LPG subsidy can raise India's healthcare costs

LPG subsidy was in many ways an investment into public health; now that will be withdrawn

Siddharth Singh 

August 4, 2017 Last Updated at 08:00 IST

Empty Liquefied Petroleum Gas (LPG) cylinders are seen at a gas distribution centre at Dujana village in Noida (Photo: Reuters)

In India, 4 to 5 lakh people die of household air pollution every year – largely due to improper ventilation combined with the use of biomass fuels for cooking and lighting. Even today, a majority of rural households continue to use biomass (such as wood and cow dung) as the primary cooking fuel. The burning of these fuels emits pollutants such as carbon monoxide, sulphur dioxide, particulate matter, benzene, and metals including lead and copper.

The use of dirty biomass fuels for cooking has several detrimental impacts on human health by either directly causing or aggravating acute and chronic diseases. For instance, pollution from such fuels contribute to 12% of still births in the country. The National Family Health Survey (2005-06) also revealed significant increases in child morbidity due to poor household air quality. There is a gender angle too, as household air pollution leads to a range of diseases among women, who are the primary cooks in most Indian households. Over 2.4 million cases of chronic bronchitis, 0.3 million cases of TB, 5 million cases of cataract and various adverse pregnancy outcomes among Indian women are attributable to household air pollution due to the use of biomass as a cooking fuel. 

A joint study by the World Bank and the University of Washington showed that in 2013, welfare losses cost India 7.7% of its GDP due to premature deaths and illnesses caused or aggravated by air pollution (both household and outdoor). The loss of labour output due to air pollution was $55.4 billion in India. There is an undeniable and significant impact of air pollution on both public and personal health expenditures. 

An obvious solution to this is the use of cleaner fuels to cook, and the provision of electricity for lighting. The latter is taking place at a steady pace. To tackle the former, the government introduced the Pradhan Mantri Ujjwala Yojana (PMUY) in 2016 to promote the use of LPG for cooking. LPG is a fossil fuel, but it burns significantly cleanly with no production of soot. LPG connections to households have steadily and significantly increased over the past few years. 

However, having an LPG connection is one thing, while actual continued usage for cooking is quite another.  

High usage costs and an inefficient supply chains are stumbling blocks, which is why “fuel stacking” is common in Indian households – i.e. many households continue to use biomass even if they have an LPG connection. Studies have shown that due to these reasons, some households make the transition back from LPG to biomass after initial usage, while others continue to use biomass primarily. 

An LPG subsidy therefore assists the poor in ensuring that this clean cooking fuel remains within the budget of many poor households, thereby keeping them healthy and saving on time spent on collecting wood. However, naturally, subsidies are a cost on the exchequer. Total petroleum subsidy was Rs. 22,000 crore in 2016-17, but it has fallen significantly from Rs. 1,61,000 crore in 2012-13. 

The quantum of the subsidy fell because not only did oil prices more than halve from over $110 per barrel in 2014 to under $50 a barrel today, but concurrently, the government removed subsidies on the sale of petrol and diesel in 2010 and 2014 respectively. 

Even as crude prices fell, India’s petrol and diesel prices remained largely stable because the government kept increasing the taxes on these products. One justification for this is that fluctuating prices at the consumer’s end can be politically risky, and the taxes will be reduced when crude prices rise. The government later termed these taxes as “green taxes” in a communication to UNFCCC. 

To further reduce the petroleum subsidy burden, the government has urged people to give up their LPG subsidies, and the petroleum ministry reports that over 1 crore have given it up so far, who are from presumably middle to high income households who do not need the subsidy. Further, households with taxable income over Rs. 10 lakh per annum have been excluded from the LPG subsidy. 

With this background, it is therefore surprising that the government has decided to end LPG subsidies too. On the 31st of July 2017, the Petroleum Minister announced the increase of LPG prices by Rs. 4 per month until the subsidy on it is completely eliminated, or until March 2018, whichever comes first. This will potentially delink the government budget with crude prices. 

While this move will have a positive impact on the government budget, it is likely to have a detrimental impact on the transition to modern fuels in rural India, and on the health of the citizens. After all, what has not changed is rural India’s reliance on biomass for cooking. The poor continue to use it – and suffer from the air pollution caused by it. 

Apart from the impact on human health and therefore the economy, what has also not changed is the affordability of LPG. This is in particular of concern at this juncture as there have been reports of significant job losses in the aftermath of demonetization – particularly in rural India. 

The removal of the LPG subsidy therefore comes at a precarious time. The subsidy was in many ways an investment into public health. The concern is that this will impact marginal households and keep many households trapped in biomass use for daily cooking – which has no place in a modern economy.

Siddharth Singh is a German Chancellor Fellow and a Visiting Fellow at the 'Wuppertal Institut für Klima, Umwelt, Energie' in Berlin. He is a researcher and consultant on energy policy and is available on Twitter @siddharth3 

11426 - Aadhaar intrusion - Daily Excelsior

Aadhaar intrusion

Posted on 18/05/2017 by Dailyexcelsior

Jaleel Wani

“The system in India is the most sophisticated that I have seen and it should be good for the world if this became widely adopted” remarks by Paul Romer, a chief economist of the world bank regarding the Aahaar program of India. Later World Development Report 2016 also mentioned that,”a digital identification system such as India’s Aadhaar, by overcoming complex information problem, helps the government to promote the inclusion of disadvantaged group”. This gives us a clear insight of the scheme started by the government of the India.

Aadhaar is one of the technological successes of India and is an initiative unparallel in scope anywhere else in the world. India is largest leading the way in the implementation of national identification program linked to biometric data. This data is collected by the Unique Identification Authority of India (UIDIA), a statutory authority established last year by Government of India under the ministry of Electronics and Information Technology, under the provisions of Aadhaar act 2016. No doubt as of now this system provided more than 113 crore residents of India an Aadhaar card which is roughly 88.8% of the projected population, is facing a legal battle to make it mandatory for Indian citizens in order to ensure efficient delivery of subsidies , benefits and services under Aadhaar act 2016.

On August 2015, a three judge bench of the Supreme Court held in ‘K.S. Puttaswamy case’ that the production of an Aadhaar card would not be condition for obtaining any benefits otherwise due to a citizen. Also bench said that having regard to importance of the matter, it is desirable that the matter be heard at the earliest. 

There after five judge constitution bench held in its interim order on October 2016 that,” we will also make it clear that the Aadhaar card scheme is purely voluntary and it cannot be made mandatory till the matter is finally decided by the court one way or the other”. This order also restricted the use of the aadhaar number to six schemes namely, Public Distribution System(PDS), Subsidized LPG cylinders , Mahatma Gandhi National Rural Employment Guarantee Scheme(MGNEGS), National Social Assistance Programme (old age pension, widow pension, disability pension), Prime Minister’s Jan Dhan Yojna and Employee Provident Fund Organization(EPFO). 

Again Honorable Court in ‘All Bengal Minority Students Council and Anr v/s UOI’ case held that Aadhaar could not be made mandatory condition for any Government scheme. However, the Central Government issued a series of notification making it mandatory for purpose other than those permitted by the Apex court. 

For instance the Ministry of Micro Small Medium Enterprises made it mandatory for MSME to register online through Udyog Aadhaar , that too within 5 days of Supreme Court interim order. Scholarships under the University Grant Commission began to be restricted to Aaadhaar holder or those who had enrolled for it. Even CBSE insisted on Aadhaar for NEET test 2017 aspirants. Railway recruitment board made it mandatory for its examination. Ministry of Human Resource Development made it mandatory for national means-cum-merit scholarship scheme and National scheme of incentive to girls for secondary education. From January this year Aadhaar enrollment became mandatory under National Food Security Act and Employee Pension scheme. Recently section 139AA of Income Tax Act 1961, as amended by Finance act 2017, provide for mandatory quoting of Aadhaar or enrollment ID of Aadhaar application form to file Income Tax return and to make an application for allotment of Permanent account number (PAN). Also in this regards even states were not holding back. The candidates for Utter-Pradesh state common entrance test were required to furnish Aadhaar Number. Andra-Pradesh engineering, agriculture and medicine common entrance test was also restricted to Aadhaar holder. In short Government of India is continuously expanding the requirement of Aadhaar for various services.

While there is doubt that the purpose behind making Aadhaar mandatory is to simplification of delivery process ranging of service to the citizen as well as distribution of benefits and subsidies which saved more than 36 crore in two years as per Governments statistics, to bring transparency and efficiency, receipt of entitlements in a convenient and seamless manner, obviating the need to produce multiple document to prove ones identity. In general it is meant to streamline bureaucratic process for better governances. It is off course a mass surveillance technique as well, unlike targeted surveillance is good thing and essential for national security and public order and would be best remedy to combat a rising global phenomena of terrorism. Apart from these, few well renowned political scholars, strategic analysts and foreign policy composers suggesting that Government should integrate the project into its neighborhood foreign policy agenda thereby countering Chinese companies who actually supplying digital network to them.

 Referring to this specific purpose Nandan Nilekani, the brain behind the unique identification concept said,” other Governments are already interested in its potential. Countries such as Afghanistan, Bangladesh, and Tanzania have visited India to talk about this system”. Besides purposes Aadhaar Act raised serious issues which are awaiting resolution by the Supreme Court.

One is the Aadhaar act is palpably arbitrary and illegal in as much as it creates an artificial impermissible classification between those entitled person who have parted with biometric and those entitled persons who have not parted with biometrics. 

This is a serious flaw, held violation of Article 14 of the constitution which guarantees equality before law and equal protection of law. 

Second is that state can’t enact a law or create a system that by its very design and operation will place the state in an extremely dominant position in  relation to every citizen. The state is under obligation under Article 13(2) of the constitution to ensure that it shall not make any law that takes away or abridges the fundamental right conferred under part third of the constitution. 

Third is that the constitutional limitation as such that the Government can’t engage in surveillance of citizens even each of these citizens volunteer to be subject to surveillance. As a person has full dominion and control over her core biometric, just as she has her body and personal autonomy, any collection of personal biometrics can only be done through free and informed written consent on the part of the individual (issue relating privacy). 

Fourth is that taking of person’s fingerprint and iris scan without informed consent is a physical invasion of his or her bodily integrity. 

Fifth is while engaging in the exercise of collecting biometrics, the Government acts as a trustee at every stage. The role of trust, given the sensitive nature of the information must be exercised by the state or organs of the state alone and can’t under any circumstance be delegated to private parties operating without any governmental supervision. The crucial stage of obtaining consent or informed consent is entirely in the hands of private players and thus against the principle of trusteeship. Sixth, this data of every citizen can pose serious problems to our country’s internal security. 

There is always an urge to acquire such data by firms to market their products catering to individual specificities but the dangers will go beyond the mere urge for profit maximization. Another aspect is that concerns of safety of data are related to the issue of cyber security. Even the most formidable firewall of NASA and Pentagon has been beached. Last but not the least is that the way Aadhaar bill was passed needs to review and check its constitutional validity.

What needs to be done is that instead of arguing the privacy is not a fundamental right Government should assure the citizens that it has the technique and system to protect the data collected and will do everything possible to prevent unauthorized disclosure of or access of such data. This century comes with certain risks; therefore Government should recognize both the need for Aadhaar and the need to stringent rules concerning access to and security of citizens’ biometric data in order to preserve privacy.

(The author is a student of Jamia Millia Islamia             University New Delhi)
feedbackexcelsior@gmail.com

10566 - 17 lakh LPG consumers to lose subsidy in region - Tribune India

Posted at: Oct 28, 2016, 1:31 AM; 

17 lakh LPG consumers to lose subsidy in region

Reason: Non-submission of Aadhaar numbers

• The Centre has asked oil marketing companies not to transfer LPG subsidy to the bank accounts of eligible households unless their accounts are seeded with Aadhaar number
• Earlier, the deadline was September 30, but the government has extended the date till November 30, and thus given two months of grace period for citizens to get the unique identification number

Vijay C Roy

Tribune News Service

Chandigarh, October 27

Over 17 lakh LPG customers in the region comprising Chandigarh, Punjab, HP and Jammu & Kashmir will not be able to get LPG subsidy in their bank accounts from December this year due to the non-submission of unique identification number (UIN) and Aadhaar number to their respective distributors.

The Centre has asked oil marketing companies (OMCs) not to transfer LPG subsidy to the bank accounts of eligible households unless their accounts are seeded with Aadhaar number.

Earlier, the deadline was September 30, but the government has extended the date till November 30, and thus given two months of grace period for citizens to get the unique identification number.

“Earlier, to avail the subsidy, the deadline was September 30, but with the government extending the deadline for another two months, consumers have time to submit their Aadhaar to their respective distributors by November 30, otherwise their subsidy will be discontinued. We have observed that around 17.35 lakh LPG consumers in Chandigarh, Punjab, Himachal Pradesh and Jammu & Kashmir have not submitted their Aadhaar card,” said a senior official in an oil marketing company. 

According to data, in Punjab, around 6.76 lakh consumers (10.4%) have not submitted their Aadhaar numbers to their LPG distributors, as a result of which their account was not seeded. The total number of LPG customers in the state is around 65 lakh. 

Similarly, out of total LPG customers in Chandigarh, 30,180 households (10.06%) have not linked their bank accounts with Aadhaar. Overall, the UT has 3 lakh LPG customers. 

In case of HP, 9% (1.17 lakh customers) of the 9.12 lakh  customers have not submitted their Aadhaar number to their dealers.  In J&K, around 9.12 lakh consumers, a whopping 57% of the total consumers, is yet to submit their Aadhaar numbers. The state has a total consumer base of 16 lakh. 

10512 - Govt can’t stop LPG subsidy for not linking Aadhaar, says UIDAI CEO - Hindstan Times

Govt can’t stop LPG subsidy for not linking Aadhaar, says UIDAI CEO

• Aloke Tikku, Hindustan Times, New Delhi |  Updated: Oct 05, 2016 00:27 IST

The LPG customers have time till November-end to apply for an Aadhaar number to continue receiving the subsidy. (HT file photo)

The government cannot hold back subsidy for cooking gas before 30 November on grounds that customers haven’t given their Aadhaar number, a top government official said on Tuesday.

ABP Pandey, chief executive officer of the Unique Identification Authority of India (UIDAI) told HT that customers have time till November-end to apply for an Aadhaar number to continue receiving the subsidy.

Pandey said the Aadhaar law requires customers who have not linked an Aadhaar number to their gas connection to submit a copy of their bank passbook, proof of Aadhaar enrolment or an undertaking that the customer has only one subsidised gas connection.

If they do, there is nothing in the law to empower the government to withhold the subsidy.

Pandey’s clarification on the legal position came against the backdrop of reports that the petroleum ministry had decided to stop transferring subsidy to eligible customers if they had not submitted an Aadhaar number.

The government had last week mandated that customers get an Aadhaar number to continue getting cooking gas subsidy.

It was the first time that an order was issued under the Aadhaar law that came into force in September this year. But the law bars the government from denying benefits to people who don’t one.

“Yes, the law requires people to get the Aadhaar number. But it is the responsibility of the government, or its agencies to ensure that everyone who applies for one, is able to enrol for the number,” said Pandey. If there are no enrolment centres at a reasonable distance, the oil company will have to set up one temporarily.

10518 - Here’s why 2.5 cr consumers will lose LPG subsidy - Financial Express

Here’s why 2.5 cr consumers will lose LPG subsidy

Around 2.5 crore domestic LPG consumers would be denied subsidy for their failure to link their bank accounts with the unique identification number Aadhaar.

By: Siddhartha P Saikia | Updated: October 4, 2016 7:16 AM

The subsidy on a 14.2-kg domestic refill increased to R62.91 starting October 1 against R41.44 per refill in September. (PTI)

Around 2.5 crore domestic LPG consumers would be denied subsidy for their failure to link their bank accounts with the unique identification number Aadhaar. While subsidy payments to some 5 crore consumers have been put on hold since July 1 in the absence of the seeding of Aadhaar with bank accounts, only half of these households have since produced the UID numbers to be eligible for subsidy, official sources told FE. They added that all consumers without Aadhaar will be denied subsidy with retrospective effect from July 1.

Currently, 16.5 crore households or over 90% of the LPG consumer base of over 18 crore receive subsidy for the fuel. The government managed to weed out 3 crore bogus household LPG connections (which were misused to divert the subsidised fuel to unauthorised commercial users) via the direct benefit transfer or PAHAL scheme during the past two years.

However, the period also saw an equal number of fresh consumers, thanks partly to the decision to give free fuel connections to rural people. Nearly 1.5 crore consumers opted to give up the subsidy while a few million users were subsequently denied subsidies as their annual taxable income was found to be more than R10 lakh.

Petroleum minister Dharmendra Pradhan maintained that his government was not against LPG subsidy, but would like to restrict the same to the really needy. The government left no stone unturned to stop leakages of subsidy and made better use of technology towards this end.

In an order of June 30, the Centre had asked oil marketing companies (OMCs) — Indian Oil, Bharat Petroleum and Hindustan Petroleum — not to transfer LPG subsidy to the bank accounts of eligible households unless their accounts are seeded with the unique identification number. “From 1.7.2016, subsidy will only be transferred to the eligible customer having Aadhaar seeding; subsidy for the (bank transfer compliant) customers who have not seeded Aadhaar will be kept on hold till 30.9.2016 after which the parked subsidy will lapse and the customer would not be eligible for subsidy of the refills consumed after 1.10.2016 till he submits Aadhaar to his/her LPG distributor,” said a note sent by the petroleum ministry to OMCs on June 30. The direction was valid for the entire country except Assam and Meghalaya.

The subsidy on a 14.2-kg domestic refill increased to R62.91 starting October 1 against R41.44 per refill in September. The Union Budget has provided R26,947 crore for fuel subsidy in the current fiscal, which consists of R19, 803 crore for LPG and R7,144 crore for kerosene. The losses incurred on selling domestic cooking gas below market price was R27,571 crore in FY16, down from R76,285 crore for 2014-15.

10506 - Seeding of Aadhaar: 25% of LPG consumers in State may lose subsidy - The Hindu

CHENNAI, September 29, 2016

Seeding of Aadhaar: 25% of LPG consumers in State may lose subsidy

Deepa H Ramakrishnan

Many consumers in Chennai, where Aadhaar coverage is low, are likely to be among those hit

With only a couple of days left for the deadline to link Aadhaar numbers with bank accounts, around 25 per cent of the consumers in the State may not get subsidy for their domestic LPG connections.

The Oil Ministry had directed the oil companies to ensure that the accounts of consumers that were linked with the LPG IDs under the Pahal scheme (previously called the Direct Benefit Transfer of LPG) are seeded with the respective Aadhaar numbers before September-end.

In June, consumers were asked to ensure that the link was through and informed that until that is done, subsidy would not be transferred.

Parking period

A parking period of three months was provided for which time the amount would be retained by the oil companies.

However, of the 1.67 crore consumers in the State, only 1.28 crore have ensured that the number is linked to their bank account. LPG distributors said that though they had informed consumers who had not done the linking so far, many did not evince interest in the same.

No response

“For many, the present subsidy component of Rs. 70-Rs. 80 a cylinder does not seem big enough to take the effort to go to the bank and get the job done. Consumers just have not responded to our calls or text messages,” said a distributor.

Another distributor said that many consumers did not have Aadhaar cards, especially in places like Chennai, where coverage is not very high. “They are not sure where to obtain the card. Though it is said that you can walk into zonal offices of the Chennai Corporation to get the biometrics done, it is not as simple. In some places, the biometrics are taken in Tahsildar offices and such changes in procedures confuse residents wanting to obtain an Aadhaar card. Many are now doing it out of compulsion as despite the Supreme Court’s directive, the Aadhar number is sought for almost everything, including to start a business,” explained a distributor.

There are also instances of consumers not receiving subsidies despite the accounts being linked with Aadhaar numbers.

Of the 1.67 crore consumers, only 1.28 crore have got their Aadhaar numbers linked to accounts

10329 - Stop quibbling, PAHAL has scythed subsidy bill, but glitches remain - First Post

Stop quibbling, PAHAL has scythed subsidy bill, but glitches remain

So, how much money did the government save by implementing direct benefit transfer (DBT) in cooking gas – the PAHAL scheme – in 2015-16? 

Is it Rs 9,211 crore, as the Ministry of Petroleum and Natural Gas claims? 

Or Rs 5,107 crore as the oil marketing companies (OMCs) estimate? 

Or Rs 4,813 crore, as the Comptroller and Auditor General (CAG) suggests in its report on the implementation of the scheme?

Should that matter, really?

It’s not as if the Ministry of Petroleum has caused any loss to the exchequer by quoting the higher figure. It’s really all about how the saving was calculated. The Ministry assumed all those who were not part of PAHAL (and hence not entitled to subsidy) would have consumed 12 cylinders a year; the CAG went by the national average consumption of 6.27 cylinders. The OMCs went by the 6.27 usage figures, but considered the subsidy rate of 2014-15; this threw up a higher level of savings because global oil prices had come down sharply in 2015-16. The CAG estimation corrected both these problems and came to a lower figure. There is nothing more to it.

These quibbles aside, is a saving of Rs 4,813 crore something to be scoffed at?

Yet another figure that is thrown up to belittle the success of PAHAL relates to the contribution of falling oil prices. The CAG report notes that the actual subsidy payout in the April-December 2015 period was Rs 12,084 crore against Rs 35,400 crore in the April-December 2014 period – a reduction of Rs 23,316 crore. But only Rs 1,763 crore of this is due to reduced offtake of cylinders, the report points out; a significant Rs 21,552 crore was on account of reduced subsidy rate due to lower oil prices.

But once again, is a reduction of Rs 1,763 crore in the subsidy bill something to be dismissed as insignificant?

Splitting hairs over the extent of savings on account of PAHAL does not take away from the main point – that PAHAL has scythed the subsidy bill. No more proof of concept is required.

The fiscal savings story may be validated, but the leakage/diversion elimination story, unfortunately, is not.

The CAG report found that the sale of non-subsidised domestic LPG cylinders had shot up after the implementation of PAHAL. 

As many as 8,023 domestic consumers used up more than 24 cylinders a year in 2015-16, more than double of 3,070 consumers who did so in 2014-15. Now since subsidy is available for only 12 cylinders a year and the rest have to be bought at market prices, on the face of it, PAHAL appears to have checked diversion of subsidised cylinders.

But that, according to the CAG report, maybe too pat an explanation. There is still, it points out, quite a large price differential between non-subsidised domestic LPG and LPG for commercial use. A commercial cylinder costs at least Rs 233.20 more than a non-subsidised domestic cylinder. In contrast, the price difference between a subsidised and non-subsidised domestic cylinder is only Rs 99.86. So there could still be a risk of domestic cylinders being diverted for commercial use. The CAG is not going out on a limb and saying this is happening but is red-flagging the issue.

How is this possible, given Aadhaar-based subsidy delivery and weeding out of duplicate accounts, one may well ask?

This is where PAHAL does not seem to have helped. The CAG found multiple LPG connections with the same Aadhaar number or same bank account as well as duplicate connections with the same name and address.

In the case of Hindustan Petroleum Corporation Ltd (HPCL), the CAG audit found 1400 LPG connections linked with 700 Aadhaar numbers – a clear case of duplication. Half of these were active consumers. There were also 14,918 consumer IDs lined with 6,614 bank accounts and IFSC numbers. In the case of Indian Oil Corporation (IOC), there were 43,323 LPG consumer IDs linked with 21,504 bank accounts and IFSC numbers.  The CAG audit also threw up cases of multiple connections having the same Aadhaar number across different OMCs - 74,180 LPG consumer IDs linked to 37,090 Aadhaar numbers.

Across OMCs, the CAG audit also found 15,885 consumers with the same name and same address (indicating duplicate connections) with 34,729 LPG connections linked to them. As a result of these various kinds of duplications, the audit found that 8,707 consumers across OMCs had availed of subsidy for more than 12 cylinders in 2015-16, though to PAHAL’s credit this is way below the figure of 37,499 consumers who availed of more than 12 subsidised cylinders in 2014-15 (remember that PAHAL kicked off only in November 2014).

The CAG audit also threw up cases of distributors not linking the Aadhaar numbers of consumers with their LPG connection IDs as well as incorrect seeding, 55,407 LPG connections in the names of minors (which is not allowed).

Clearly technology has its limits – it works when humans handling it do it efficiently or without crooked intent; but it is not too intimidating a bar for those determined to game the system. But it could equally be argued that the Aadhar-based de-duplication system has helped bring these discrepancies to light.

The CAG report on PAHAL, far from being a damning indictment of the scheme as detractors would like to portray it, actually shows that it has helped in generating considerable savings. The government now needs to fix the other problems it has highlighted so that the savings – no matter how they are calculated – can be even higher.

10315 - HE MULTIPLE FACETS OF AADHAAR - Daily Pioneer

HE MULTIPLE FACETS OF AADHAAR

Monday, 08 August 2016 | Himanshu Lal | in Oped

The Government’s decision to link direct benefit transfers with Aadhaar can be a game-changer in a sense that it will empower not only various schemes but also numerous sections of the society. Sooner or later, Aadhaar has to become the aadhar of the country

Aadhaar is a 12-digit unique   identification number issued by the Unique Identification Authority of India (UIDAI) for all residents in the country on a voluntary basis. The number is stored in a centralised database and is linked to basic demographics and biometric information-photograph, 10 fingerprints and iris of each individual. It ensures uniqueness and there can be no space for duplicity in the future as per the present technology.

Initially, Aadhaar was used only for identification purpose, but now, it is being used as a device for direct benefit transfers (DBT) to the poor and needy under various Government schemes. Aadhaar is a real game-changer for this country. Till now, due to various cases in the Supreme Court, only a few schemes related to the poor and needy viz, the National Rural Employment Guarantee Act (MNREGA), the National Social Assistance Programme, the Pradhan Mantri Jan-Dhan Yojana, various scholarship programmes, LPG subsidy etc, could become Aadhaar-based.

The total savings on behalf of leakages due to Aadhaar-based seeding, during the last five and a half years, tantamount to billions of rupees. A World Bank study which applaudes the Aadhaar-based seeding points out, “India’s fuel subsidy programme, implementing cash transfers to Aadhaar-linked bank accounts, to buy liquefied petroleum gas cylinders, saved about one billion dollar per year when applied throughout the country.”

According to another report, the implementation of Aadhaar enabled four States viz, Andhra Pradesh, Telangana, Pondicherry and Delhi save a total amount of Rs 2346 crore.

On the other hand, the Government estimates to have saved over Rs 27,000 crore by cash transfers for payments to beneficiaries under various welfare schemes in the last two years. DBT has resulted in significant savings across welfare schemes. It has also resulted in weeding out of duplicate beneficiaries. For instance, over 1.6 crore (16 million) bogus ration cards have been deleted, resulting in savings to the tune of Rs 10,000 crore.

Similarly, 3.5 crore duplicate beneficiaries were weeded out in the PAHAL scheme, resulting in savings of over Rs 14,000 crore in 2014-2015 alone. Similar efforts in MGNREGS led to a saving of Rs 3,000 crore — roughly 10 per cent of the entire annual budget of the reform. Several States and Union Territories too have achieved significant savings through DBT.

On April 4, UIDAI generated the 100th crore Aadhaar. Also, the Aadhaar (Targeted Delivery of Financial and other Subsidies, benefits and services) Act, 2016, was passed on the March 11 by the Lok Sabha.

The generation of the 100th crore Aadhaar and the passage of the Aadhaar Act will be remembered as two landmark events in the history of India. With this, Aadhaar has become the largest online digital identity platform in the world. Not only this, presently, it is the world’s one of the most secured data repository system too. Functionally, it is better than the digital identity system of Chile, Ghana, Pakistan, South Africa, Turkey or Egypt.

Very few people are aware of the fact that Aadhaar-based identification system is more mammoth, more secure and more unique than the United States’ Social Security number-based identification system which does not cover the biometrics and iris of individual. It covers only the demographic data of an individual and hence, it cannot be unique and secure. It can be fudged, altered or manipulated which is not true for Aadhaar-enabled system in India.

The passage of the Aadhaar Act, 2016, will facilitate the formation of a statutory unique identification authority of India and the linkages of Aadhaar-enabled system to various schemes, programmes and services of Government of India, starting from taking benefit of a scheme to railway reservations, to income tax collections.   Every scheme and service in India can be connected to the Aadhaar network.

This new Act provides for several measures for the security and confidentiality of information. There are restrictions on sharing of information and there are punishments and penalties for misuse of information/impersonation in the Act.

Hence, the new Aadhaar Act, at one time, provides for the facilitation of the Aadhaar-based linkages with the different schemes/services of Government of India which will help save billions of exchange every year. At the same time, it has tried to secure the information provided by citizen in the best possible way by having various provisions to ensure the security of information.

The future of it lies in the speed with which the services and schemes are linked with Aadhaar in as little time as possible.  Every activity of business, enterprise or Government has a potential of being linked with Aadhaar-based system which, at this time, is one of the most well-secured information infrastructure of the world.

Even mobile companies can make their mobiles Aadhaar-enabled. This will help the citizens avail any service from a click of a mobile in a secured way. Also, the Government of India spends huge money in elections and in managing the election structure. Aadhaar-enabled voting system, if implemented in the future, will not only help the Government save billions of rupees, which are being incurred in providing EPIC cards, revision of electoral rolls, and eliminating duplicate entries from such lists, but will also help generate every individuals vote. Sooner or later, Aadhaar has to become the aadhar of the country.

This very Aadhaar programme,  ideally supports the motto of ‘maximum governance and minimum Government’, that was echoed by the NDA Government at the Centre. This will surely help in heralding a new age in India’s governance system which is badly in need of an immediate overhaul.

While bringing governance to the maximum use of people, through the medium of information and communication technology, Aadhaar can truly be regarded as one step ahead in an emerging global power like India. Indians having an identity

proving to be more than what they have in the past, Aadhaar needs to be promoted across the country through education campaign in schools and in news media in a massive way what it is done today.

(The writer is Additional Director General of UIDAI)

10311 - Narendra Modi govt says households not to get LPG subsidy without Aadhar card - Financial Express

Narendra Modi govt says households not to get LPG subsidy without Aadhar card

The move, which shows the government’s policy intent to make Aadhaar mandatory for receipt of assorted sops, comes almost a year after the Supreme Court’s interim order, allowing the use of Aadhaar for public distribution system (PDS) and LPG subsidy deliveries.

By: Siddhartha P Saikia | New Delhi | Updated: August 5, 2016 6:59 AM

The Petroleum Ministry’s Latest Move Takes The Policy Even Further By Making Aadhaar-Seeded Bank Accounts Compulsory For The Lpg Subsidy. (Pti)

The Centre has asked oil marketing companies (OMCs) not to transfer LPG subsidy to the bank accounts of eligible households unless their accounts are seeded with the unique identification number, Aadhaar. The move, which shows the government’s policy intent to make Aadhaar mandatory for receipt of assorted sops, comes almost a year after the Supreme Court’s interim order, allowing the use of Aadhaar for public distribution system (PDS) and LPG subsidy deliveries.

“From 1.7.2016, subsidy will only be transferred to the eligible customer having Aadhaar seeding (sic); subsidy for the (bank transfer compliant) customers who have not seeded Aadhaar will be kept on hold till 30.9.2016 after which the parked subsidy will lapse and the customer would not be eligible for subsidy of the refills consumed after 1.10.2016 till he submits Aadhaar to his/her LPG distributor,” said a note sent by the petroleum ministry to OMCs on June 30.

The direction is valid for the entire country except Assam and Meghalaya. While the SC had ruled against making Aadhaar mandatory for receipt of benefits from the government, it allowed the use of the UID on a voluntary basis for specified schemes. After LPG and PDS schemes, it had in October last year, extended the facility to the Mahatma Gandhi National Rural Employment Guarantee Scheme and Pradhan Mantri Jan Dhan Yojana.

According to the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, passed by Parliament during the Budget session in the wake of the Supreme Court’s interim order against making Aadhaar mandatory, the Centre or state “may” require individuals getting government benefits to undergo authentication or furnish Aadhaar number. However, the petroleum ministry’s latest move takes the policy even further by making Aadhaar-seeded bank accounts compulsory for the LPG subsidy.

The petroleum ministry order adds that if the customer submits Aadhaar after July 1 and before September 30, his or her subsidies, if any, will be linked to his bank account and the consumer will start receiving them thereafter.Currently, there are more than 17 crore domestic cooking gas consumers. Of this, 15.8 crore have been added to PAHAL (direct benefit transfer for LPG subsidy) scheme. Nearly, two crore cooking gas consumers have not seeded their Aadhaar number with the bank accounts.
The subsidy on a 14.2-kg domestic refill dropped to R63.91 starting August 1 against R116.34 in the previous month.

The Union Budget has provided R26,947 crore for fuel subsidy in the current fiscal, which consists of
R19, 803 crore for LPG and R7,144 crore for kerosene.

10127 - Filing fresh KYC forms irks LPG consumers - TNN

Filing fresh KYC forms irks LPG consumers

TNN | Jun 11, 2016, 06.35 AM IST

Nashik: LPG companies have started sending messages to their consumers asking them to submit fresh know your client (KYC) forms to the distributors for getting subsidy, which has enraged the citizens. They have expressed anger over "repeating the exercise for no specific reason".

"Such messages from petroleum companies are doing the rounds. Why should we do the same exercise which has already been done? There is no update and I still have not got my Aadhaar number. Why is it compulsory for me to issue fresh KYC?" questioned Anand Parmar, a resident of Pathardi Phata.

Sources in the companies said even as the Supreme Court order still stands, they are trying to get their data updated at the same time.

"Going by statistics, only 4% of the population in Nashik district does not have Aadhaar numbers. During the last six months, there has been very little or negligible update about Aadhaar numbers. The consumers have started presenting their numbers to the distributors as well as banks. This clearly shows that the consumers were not doing so on their own. However, those who still not have got Aadhaar numbers will not be deprived of their subsidies if they renew their KYC forms. It is not a tedious job," said an official.

District supply officer Sarita Narke, however, said she was not authorised to stop or expedite the process. Narke said she has no idea about how many LPG consumers have complied with the Aadhaar number norm. "Since we have no role - supervising or monitoring - in the system, we are not aware of the issue. But we will look into it to ensure that the citizens do not suffer," the officer added.

10104 - Submit Aadhaar number or forget LPG subsidy - TNN

Submit Aadhaar number or forget LPG subsidy

Abhilash Botekar | TNN | Jun 4, 2016, 07.19 AM IST

Nashik: Petroleum gas companies have started sending messages to liquefied petroleum gas consumers to submit their Aadhaar numbers with a warning that the ones who do not comply with the same stand to lose their subsidy. 

"To receive subsidy in your bank a/c, kindly submit Aadhaar or submit fresh KYC form at your LPG distributor. The last date of submission is June 15, 2016," messages sent to the LPG consumers across the city read. 

A senior officer from one of the petroleum companies said, "The petroleum ministry has sent us a communication asking us to collect the Aadhaar numbers from all the people who have not submitted it till now and were receiving the subsidy in their bank accounts - under the direct benefit transfer of LPG (DBTL). Accordingly, the move for collecting the Aadhaar numbers has been stepped up." 

Those not submitting Aadhaar number will not get subsidy. It will, however, be diverted in parking funds till September 2016. Even if the Aadhaar numbers were not submitted till then, the amount would lapse. 

Officials in the district supply office said that the consumers need not press the panic button given that the message clearly pointed out that they should clear their KYCs if they were not able to furnish their Aadhaar numbers. 

"The consumers can simply give an undertaking to the distributor saying that he/she does not have Aadhaar number and shall be submitted the day when they get one. This will ensure that their subsidy is not stopped and continue to be deposited in their account," the officer said. 

Meanwhile, those submitting their Adhaar numbers need to submit the same at the LPG distributors as well as to the banks as well. "The process has to be completed at both ends by the consumers and hence they need to verify it as well," an LPG company official said.

9977 - A K Bhattacharya: Towards a new cooking gas regime - Business Standard

A K Bhattacharya: Towards a new cooking gas regime

A K Bhattacharya 

May 10, 2016 Last Updated at 21:48 IST

It was in 1955 that India saw the roll-out of liquefied petroleum gas (LPG) connections for use as domestic cooking fuel. For many decades since then, LPG connections have been expanding their reach across the country. By almost the middle of 2014, the total number of LPG connections was estimated at around 130 million. In the next two years, however, the coverage saw a sudden spurt as the number of active LPG connections increased by over 37 million. In other words, over 28 per cent of the number of LPG connections extended in about 60 years was added in just two years.

The periods chosen for comparison are significant for two reasons. One, they compare the performance of the various petroleum ministers in those 60 years with that of the current petroleum minister, Dharmendra Pradhan, in the last two years under the National Democratic Alliance government. Two, the two-year period from the middle of 2014 also coincides with a significant decline in international crude oil prices and a step-up in the coverage of the direct benefits transfer scheme for cooking gas distribution using the biometric identity-based Aadhaar system.

There is no doubt that an energetic and focused petroleum ministry, led by Mr Pradhan, has been a big help in spreading the LPG network. But it must also be noted that this initiative was aided by the falling crude oil prices which meant a steady reduction in the burden of under-recoveries on the oil marketing companies and subsidies on the central exchequer, even as the network of cooking gas connections rose sharply in these two years.

The oil subsidies burden on the government in 2013-14 was estimated at over Rs 85,000 crore. This saw a steep fall to around Rs 76,000 crore in 2014-15 and further down to Rs 27,000 crore in 2015-16. More than half of the petroleum subsidies go towards cooking gas for domestic use. Last year, LPG subsidies were estimated at Rs 16,000 crore.

The reduction in LPG subsidies has been achieved also with the spread of the Aadhaar-based direct benefits transfer scheme. Almost 90 per cent of the LPG connections in the country have been covered under this system of transferring subsidies directly to the bank accounts of the consumers. A district-wise monitoring of how the cash transfer scheme can cover more LPG customers has yielded huge benefits.

In addition, the wider coverage of the scheme has helped the government save on its subsidies bill. An estimated Rs 21,672 crore was saved on account of LPG subsidy in the last two years as the direct benefits transfer scheme helped weed out duplicate and ghost connections. The number of fake connections eliminated in the last one year is significant - over 33 million connections. Like his claim of the world's biggest cash transfer scheme for cooking gas, Mr Pradhan can also legitimately describe the elimination of false LPG connections as one of the world's biggest clean-up of fake customers in just one year.

Supplementing this initiative was a campaign launched by Prime Minister Narendra Modi, asking the economically well-off sections of society to give up their subsidised gas connections. Even the government had perhaps underestimated the response to the campaign. In about a year or so, over ten million customers have given up their connections and the government has saved subsidies worth Rs 5,000 crore.

It is possible that many of those who gave up their connections in response to the campaign may have been enjoying multiple connections and they realised that the coverage of the direct benefits transfer scheme would soon put an end to the practice of their having more than one connection per person or household. Whatever be the actual reason, the campaign did reduce the burden of subsidies on account of the cooking gas sector.

Finally, a new scheme to offer subsidised cooking gas connections to the poor has been launched. About 50 million poor families are proposed to be covered under the scheme in the next three years at a cost of Rs 8,000 crore. The government hopes that the task of identifying the poor would be less difficult by using a combination of methods - the Socio-Economic Caste Census, Jan-Dhan Yojana bank accounts, Aadhaar-based identity and the national LPG database - so that there is no misuse. Only time will tell if that exercise helps achieve the desired goals of targeting the scheme only to the poor.

But there is no denying that, underpinning all these initiatives, there seems to be a pragmatic approach to improving the targeting of subsidies and expanding the reach of clean cooking fuel for the poor. The approach certainly makes good politics, but whether it also makes good economics is a relevant question. It will probably become good economics as well if Mr Pradhan pays attention to at least three areas while implementing the next phase of cooking gas reforms.

One, there should be no delay in removing subsidies on cooking gas for the rich and the criterion for the rich should not be determined not just on the basis of income, but on a set of identifiable physical assets. Two, the principle of the direct benefit transfer scheme should be extended to all modes of cooking gas supplies including the connections that are to be issued to the poor families in the next three years. This will reduce the burden on the oil marketing companies and leakage of subsidies.

Finally, Mr Pradhan must put in place a plan to strengthen the city gas distribution system across the country so that over the next few years, India's cities switch over to piped natural gas as cooking fuel, leaving LPG cylinders for smaller towns and villages.

9938 - Subsidised gas - Business Standard

Subsidised gas

New scheme faces many challenges, raises questions

Business Standard Editorial Comment  |  New Delhi 

May 4, 2016 Last Updated at 21:42 IST

Prime Minister Narendra Modi has launched an ambitious programme to provide subsidised liquefied petroleum gas (LPG) connections to 50 million poor families. The connections will be allotted in the name of women members of households that are living below the poverty line (BPL). It is a three-year programme - the Pradhan Mantri Ujjwala Yojana - and would cover 15 million households in the first year, for which a budgetary provision of Rs 2,000 crore has already been made. 

The cost of the entire programme, to be borne by the Union government, will be substantial at Rs 8,000 crore. While launching the scheme at Ballia in Uttar Pradesh, Mr Modi criticised former prime ministers for only focusing on the "ballot box" and not framing schemes keeping in mind the interest of the poor. There is little doubt that what Mr Modi has launched will immensely benefit the poor - indoor air pollution caused by unclean cooking fuel used by the poor is estimated to cause 1.3 million premature deaths in the country every year. Use of LPG will reduce pollution and improve the quality of life. But there is no denying that the programme will also give a big boost to his and his party's prospects in the coming elections.

But the problem is that these political gains come at a significant cost to the exchequer. Worse, it also reflects how the scheme may have ignored the need for LPG pricing reforms and well-targeted delivery of subsidies. The first big challenge for the scheme would be to identify the poor households so that the subsidised cooking gas connections could be allotted to the deserving persons only. In the absence of proper and authenticated data on BPL population, the government is relying on the Socio-Economic Caste Census data, but that may not be enough and the scheme may remain poorly targeted or misused. There is also the challenge of sustaining the scheme by strengthening distribution channels and ensuring supply of smaller-sized gas cylinders for the poor. Second, the scheme is not likely to use the Aadhaar-based direct benefits transfer (DBT) system that facilitates transfer of subsidies to the beneficiaries' bank accounts. Thus, the government would be directly compensating oil companies for their losses on account of the subsidised gas connections. This then would suffer from all the attendant problems of leakages and delayed reimbursements, undermining the finances of oil marketing companies. The advantages of an Aadhaar-based DBT scheme that insulates the oil companies against reimbursement delays would be lost.

A more troubling question pertains to the future direction of LPG pricing and reform of subsidies. The government is yet to withdraw subsidies on cooking gas for the economically well-off sections of society, even though it has made known its intention to limit the subsidies only to those earning below an income threshold. Instead, it is relying on cooking gas consumers to give up their subsidies voluntarily. Already 10 million households are said to have given up the subsidy benefit on cooking gas. While subsidy savings through such voluntary actions may help reduce the subsidy bill, this surely cannot be a long-term and sustainable strategy. With international crude oil prices still low, the government should lose no time in fixing a criterion based on both income and assets, so that subsidised LPG supplies to those above that threshold are phased out

• 
  SC AGGARWAL
  Whether gas is subsidised or not subsidised it is not a problem for the people. The real problem and its solution lies that in every household there should be a LPG connection. After being successful in my own adopted village, now I am trying to see that every household in every village of my home district should have a LPG connection. Now people have started realising in villages not to be dependent upon BPL card or APL card. LPG connection is a must and should be made available to every family.
  May 05, 2016, Thursday

9837 - The LPG puzzle by Jairam Ramesh - Indian Express

The LPG puzzle by Jairam Ramesh

Whichever way one slices the data, it is clear that claims of a Rs 15,000 crore saving in LPG subsidy solely through Aadhaar are erroneous.

Written by Jairam Ramesh | Published:April 13, 2016 12:01 am

Arun Jaitley, during the discussion in the Rajya Sabha on the Aadhaar bill, claimed that a sum of Rs 14,672 crore was saved in LPG subsidy for the year 2014-15 under the direct benefits transfer scheme.

Eugene Wigner, the great physics Nobel laureate, once said that in national politics, the truth is often less popular than a clever lie. Thus it has been with the manner in which the Aadhaar legislation has been pummelled through Parliament. 

In today’s technology jargon, then PM Manmohan Singh and Congress president Sonia Gandhi were astute political venture capitalists in wholeheartedly backing a radically innovative start-up in 2009: The Aadhaar project. Irony died a thousand deaths when in the current charged environment of purported anti-national university campuses, Aadhaar is being hailed by the BJP’s minister of finance, Arun Jaitley, while a standing committee led by the BJP’s own former finance minister, Yashwant Sinha, rejected Aadhaar as an anti-national project in 2011. That committee devoted an entire section in its report to “national security vs UID” and insinuated that Aadhaar aided illegal immigrants and infiltration from across the borders. 

When the principal opposition party, the Congress, supports the Aadhaar law in much of the letter and all of the spirit, it is suspiciously mischievous of the government to mischaracterise, mislead and misinform the people about Aadhaar in its conniving attempts to pass the bill.

The government’s too-clever-by-half strategy of calling the Aadhaar bill the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill was an obvious ploy to subvert discussion in the Rajya Sabha by deeming it a money bill. The word “finance” needed to be sneaked into the main element of the bill and hence this title. 

To target delivery of subsidies, it is imperative to first determine who is eligible for that subsidy. This can be done only with income and other such information, which is outside the domain of the Aadhaar programme. When confronted by privacy sceptics, proponents of Aadhaar defended it under the guise of the Aadhaar database having only demographic information of individuals. 

But now, as per the bill, Aadhaar’s only purpose is to “target” those individuals for subsidies. Either Aadhaar is an innocuous tool to verify the identity of a person or it can glean private information to target individuals for benefits. It cannot be both. Which one is it, Mr Finance Minister?

The finance minister, during the discussion in the Rajya Sabha on the Aadhaar bill, claimed that a sum of Rs 14,672 crore was saved in LPG subsidy for the year 2014-15 under the direct benefits transfer scheme. The prime minister had publicly claimed a similar savings of Rs 15,000 crore in LPG subsidy. The finance minister and his officials were confronted with evidence by independent, globally reputed think-tanks of savings on LPG subsidy being in the range of merely Rs 12 to 14 crore. The chief economic advisor of the government, in a desperate attempt to safeguard and hedge the intellectual sanctity of these dubious claims of the government, says “we estimate that the potential annual savings will be Rs 12,700 crore… We did not — and did not intend to — assert that that absolute figure was in fact the actual saving” (‘Clearing the air on LPG’, April 2, The Indian Express). 

In a response to a Lok Sabha question, the ministry of petroleum remarked on August 10, 2015, that there was an LPG subsidy saving of Rs 11,640 crore between FY14 and FY15. By its own admission, these savings were mainly due to a fall in global oil prices. Further, the ministry revealed that of the 15.7 crore active LPG consumers who received an average annual subsidy of Rs 3,327 each in FY14, 13.7 crore have switched to getting cash subsidy in their bank accounts rather than subsidised LPG cylinders. However, as of March 2016, only 12.3 crore LPG consumers have provided their Aadhaar numbers. Is the ministry then claiming that the remaining beneficiaries are all ghosts and duplicates? If so, how do 13.7 crore LPG consumers receive cash subsidy in their bank accounts? And how much of this saving is due to removing duplicates through Aadhaar? Whichever way one slices and dices the data, it is abundantly clear that claims of Rs 15,000 crore of saving in LPG subsidy solely through Aadhaar are erroneous and deceitful.

So, we now have the chief economic advisor of the government clearly saying that there could be a potential annual saving in LPG subsidy of Rs 12,700 crore in the future. We have the finance minister claiming on the floor of the House that there was an actual saving of Rs 14,672 crore in LPG subsidy due to the direct benefits transfer programme. And we have an independent think-tank estimating the actual saving at a paltry Rs 12 to 14 crore. Again, all three cannot be right. Which one is, Mr Finance Minister?

In its penchant for majoritarianism and loathing for debates, the Modi government has needlessly entered a chakravyuh (borrowing from the Economic Survey) in painting the Aadhaar bill as a money bill and trying to justify it using arbitrary and self-contradictory estimates. 

It is both sad and sardonic that a bill aimed at ushering in a clean and efficient welfare delivery regime should be so shabbily and inefficiently ushered into law. Privacy and other issues notwithstanding, Aadhaar is undoubtedly transformative as a subsidy sudhaar initiative but could do without the hype that has been built around it.

The writer is a Congress Rajya Sabha MP and former minister for rural development who initiated the use of Aadhaar in the MGNREGA and the National Social Assistance Programme. Praveen Chakravarty, fellow in political economy at the IDFC Institute, Mumbai, provided inputs.

- See more at: http://indianexpress.com/article/opinion/columns/the-lpg-puzzle/#sthash.B6zqQH7b.dpuf

9653 - Column: DBTL benefits could be transitory - Financial Express

Column: DBTL benefits could be transitory

Subsidy burden could rise rapidly as more households turn active consumers

By: Renu Kohli | March 23, 2016 12:27 AM

LPG-subsidy savings from shifting to direct benefits transfers (DBT) using Aadhaar has been controversial due to vastly varying estimates. The savings accrued are mainly attributable to the elimination of nearly 33.4 million ghost consumers. The ministry of petroleum and natural gas claims to have saved Rs 14,672 crore in FY15. Researcher Kieran Clarke of International Institute for Sustainable Development (IISD) figures that the sum of savings directly due to LPG DBT (DBTL) could be far less—Rs 12-14 crores in FY15 and Rs 120.9 crore in FY16. The contention here is that a larger chunk of savings came from measures taken to eliminate ghost/duplicate accounts by the oil marketing companies (OMCs) before DBT was even implemented.

Whatever be correct, it is undeniable that budgetary savings on LPG subsidy from elimination of nearly 33.4 million ghost accounts must have been significant. And the fact that another 16.5 million active consumers are no longer availing the subsidy must have further increased the sum saved. From a fiscal perspective, however, the more important point to recognise is that these savings are one-off, and future subsidy payouts could rapidly rise as more households are brought under coverage through issuing fresh gas connections. Thus, while Aadhaar-linked direct benefits transfer does exclude the possibility of a return of ghost consumers, per se it may do little or nothing to reduce or get rid of the LPG subsidy burden in the medium- to long-run.

Here is how this could pan out. Period 1 (t): LPG subsidy savings one-time only

The current estimated reductions in the LPG subsidy or savings arise from knocking off any false, fraudulent claimants who had opened numerous accounts with the oil marketing companies (OMCs). Such customers bought subsidised gas cylinders for either personal use or black-marketing. Before and after introduction of DBTL, the OMCs have been weeding out the duplicate and ghost customers; in the process, millions of previously fake gas connections have been freed.  Let us call this time period ‘t’. Savings in the subsidy bill, whatever be the amount, genuinely accrue to the government in the first round, i.e., in t. This comes from reduction in the number of beneficiaries. The freed gas connections will show up as excess or surpluses with OMCs in the current period and can potentially be sold at market prices.

LPG subsidy rises in t+1, t+2, t+3…

In the next round, or periods t+1, t+2, t+3… onwards, the surplus LPG connections that have reverted to the OMCs will be sold or given as fresh, genuine LPG connections to new consumers as there is still a large gap between demand and supply. The active consumer base size of 162.7 million is 66% of the total households (246.7 million) and the LPG-subsidy exclusion threshold has been set at much higher income level of R10 lakh per annum. Given the strong buzz around Aadhaar-based benefits being directly credited to individual bank accounts, it is reasonable to expect the demand for subsidised gas cylinders will soon begin to rise.

From the standpoint of the subsidy load, the relevant parameter is the rate at which the demand for new gas connections increases. The addition of new customers, or subsidy claimants/beneficiaries, will be determined by the pace at which information and awareness about subsidised LPG connections under DBTL spreads. Note that a supply constraint that previously restrained the expansion rate of new LPG connections, is considerably relaxed at present because of the millions of freed gas connections lying surplus with the OMCs. As new customers are added, the demand for subsidised LPG cylinders and hence, the government’s LPG subsidy payout, will once again begin to rise. Simultaneously, the one-off gains from getting rid of duplicate, false accounts will also begin to dissipate.

Government intervention could accelerate the pace

The previous scenario can be regarded as a normal rate of expansion, i.e., one that is determined as well as restricted by a standard rate of information spread and rise in household incomes. But the normal rate could accelerate due to government intervention. Schemes like Ujjwala, announced in the recent budget, could be one such example. This aims to provide LPG connections to 15 million women belonging to below poverty line (BPL) families during FY17.

What’s more, the scheme will continue for at least two more years to cover a total of 50 million BPL households. The targeted addition of these new customers will thus advance an otherwise normal expansion rate of new LPG-subsidy beneficiaries. The  LPG subsidy, in that case, may not just return to previous levels, but is well likely to exceed those simply because of accelerated inclusion of new beneficiaries into its fold as well as augmented supply conditions. In other words, the scale and scope of coverage of the LPG-subsidy—availability and the budgetary weight—will rapidly increase in the next two-three years!

Thus, while the Ujjwala-scheme has laudable objectives, viz., health and ecological benefits, from a purely fiscal (subsidy) perspective, its contribution of R1,600 for each LPG connection to BPL households can be viewed as re-routing or diversion of yesterday’s ghost accounts that are now free and lying surplus with the OMCs. Ujjwala beneficiaries will be identified in consultation with state governments and Union Territories; however, previously uncovered populations will be prioritised. This means that information spread about cooking gas subsidy from the government will accelerate. It is anybody’s guess if, at a later date, state governments start adding on as they have been doing with the popular rice-wheat schemes. The incontrovertible facts are that the LPG-subsidy payout could increase sharply in t+1, t+2, t+3…and so on, while the roots of cooking-gas subsidy culture will get more deeply entrenched.

So while Aadhaar-linked direct benefit transfers are likely to result in substantial benefits from better targeting of universal schemes like food security, DBTL in the case of LPG-subsidies is unlikely to yield any significant budgetary savings beyond the short-run. DBT or no DBT, the fiscal burden from LPG-subsidies will continue to rise for a very long period. That is, until the entire population’s needs for cooking gas are satisfied and/or exhausted – five, ten, fifteen or as many years it may take. Further, it also needs flagging that when international gas prices begin to harden the problem could multiply manifold in no time. There is no way that the cooking gas subsidy burden is going to reduce because of DBT. The only logical solution is outright elimination with a shift to market-based pricing and purchases by consumers.

The author is a New Delhi-based economist

TAGS: Aadhaar Bill

9620 - Govt's LPG subsidies caused loss of 97 crore, not any savings, finds study - News Minute

Govt's LPG subsidies caused loss of 97 crore, not any savings, finds study

The reduction in cooking-gas subsidies in 2014-15 was no more than Rs 143 crore ($21 million), the study said.

Saturday, March 19, 2016 - 12:20

- See more at: http://www.thenewsminute.com/article/govts-lpg-subsidies-caused-loss-97-crore-not-savings-finds-study-40497#sthash.bgIg7TV6.dpuf

By FactChecker.in

The government has said that direct transfers of subsidies to cooking-gas consumers have saved Rs 14,672 crore ($2.2 billion) but it actually led to a loss of Rs 97 crore ($14 million), according to an analysis by the Global Subsidies Initiative, a part of Canada-based International Institute For Sustainable Development (IISD).

The reduction in cooking-gas subsidies in 2014-15 was no more than Rs 143 crore ($21 million), the study said.

The government set aside Rs 200 crore ($30 million) to implement the direct benefit transfers for liquefied petroleum gas (DBTL), or Pratyaksh Hanstantrit Labh (PAHAL), of which Rs 40 crore ($6 million) were commissions paid in 2014-15, the study said, quoting the government’s own figures.

“Therefore, the maximum net saving, according to the government’s own figures—without accurately accounting for the costs of implementation and entirely discounting Rs 5,234 crore ($781 million) provided in permanent advances (and associated interest costs)—was approximately (-) Rs. 97 crore ($14 million),” the IISD report said.

On October 12, 2015, the government said 33.4 million consumers were blocked under PAHAL and related activities. “If we take into account the quota of 12 cylinders per consumer and the average LPG subsidy of Rs 336 [sic] per cylinder for the year 2014–15, estimated savings in LPG subsidy due to the blocking of 33.4 million accounts work out to Rs 14,672 crore ($2.2 billion), during that year,” the government’s release said.

Subsidies have grown four-fold over the last 10 years, IndiaSpend reported earlier.

Petroleum subsidies increased from Rs 2,820 crore in 2007-08 to an estimated Rs 26,947 crore in the budget estimates for 2016-17, a nine-fold growth.

The petroleum subsidy peaked at Rs 96,880 crore ($17.9 billion at an exchange rate of Rs 54/$) in 2012-13 and declined to about Rs 30,000 crore ($4.4 billion) in the revised budget estimates for 2015-16.

Public data “clearly demonstrate” that DBTL was not responsible for identifying and blocking 33.4 million connections or even a significant fraction of this number, the IISD study said.

“… the large majority of the connections formally identified and blocked as of March 31, 2015 (and presented as blocked by DBTL) were done prior to the nationwide introduction of DBTL, and through methods entirely unrelated to DBTL or Aadhaar,” the report said.

Fake and duplicate connections unearthed—but not as the government claims

A large majority of potentially irregular connections were identified through a process unrelated to DBTL. “The only mechanism for identifying and blocking potentially irregular connections that was specific to the DBTL programme (as implemented) was Aadhaar-based de-duplication,” the IISD report said.

The government’s own figures have demonstrated that the maximum number of potential duplicates identified in LPG databases through Aadhaar-based de-duplication is approximately 1% (or less) of connections assessed—a figure that may relate to an even smaller percentage of consumption, the IISD study reported.

The list-based de-duplication was between 15 to 20 times more effective in identifying irregular connections than the Aadhaar-based method, while imposing less than 1% of the equivalent cost of implementation to both government and beneficiaries.

“In the case of LPG, the path to substantive subsidy reform is clear—reinstatement of a realistic per-household cylinder cap, adjustment of the per-cylinder price-to-subsidy ratio, a crash programme of access extension to all non-connected households, and rapid expansion and formalisation of access to smaller cylinders (both subsidised and unsubsidised),” the IISD study said.

The Finance Minister’s LPG expansion programme

During his budget speech, the Finance Minister announced plans to give cooking gas to 50 million households that live below the poverty line.

“We have decided to embark upon on a massive mission to provide LPG connection in the name of women members of poor households,” said Jaitley. “I have set aside a sum of Rs 2,000 crore ($290 million) in this year’s Budget to meet the initial cost of providing these LPG connections. This will benefit about 15 million households below the poverty line (BPL) in 2016-17. The scheme will be continued for at least two more years to cover a total of 50 million BPL households.”

The proposal has also been welcomed by experts. As columnist Swaminathan Anklesaria Aiyar wrote: “The analysis of Arun Jaitley’s Budget has focused on issues like the fiscal deficit, boost to infrastructure, and sundry tax measures. Yet in terms of life and death, by far his most important proposal is the scheme to provide LPG (cooking gas) to the poorest 50 million households over the next few years. This finally shows sensitivity to one of India’s greatest health hazards that has long been ignored…indoor pollution has always been a far greater health hazard, killing and maiming million… at last we have recognised a huge problem terribly neglected for decades.”

(FactChecker.in is a fact-checking initiative, scrutinising for veracity and context, statements made by individuals and organisations in public life.)

- See more at: http://www.thenewsminute.com/article/govts-lpg-subsidies-caused-loss-97-crore-not-savings-finds-study-40497#sthash.bgIg7TV6.dpuf

9381 - Centre goes for deeper LPG sops cut - Financial Express

Centre goes for deeper LPG sops cut

Seizing the opportunity presented by a narrowing of the difference between subsidised and market prices of LPG bottles, the government has turned more aggressive in its efforts to deny the subsidy to the relatively well-off.

By: Siddhartha P Saikia | New Delhi | February 19, 2016 1:09 AM

Seizing the opportunity presented by a narrowing of the difference between subsidised and market prices of LPG bottles, the government has turned more aggressive in its efforts to deny the subsidy to the relatively well-off. Households with an annual income of above Rs 10 lakh will not receive the subsidy in bank accounts from April 1, official sources told FE.

Text messages sent recently to LPG consumers by the three state-run oil marketing companies (OMCs) read as follows: “If your/spouse income is above (R) 10 lacs, LPG subsidy is not admissible as per govt directive. If so, submit a declaration to your distributor or at www.mylpg.in.”

While this on the face of it would seem a reiteration of the December 2015 statement by the petroleum ministry where it said that the subsidy “will not be available for LPG consumers if the consumer or his/her spouse had taxable income of more than Rs 10,00,000/- during the previous financial year,” the OMCs’ text message is in fact sterner for two crucial changes: The OMCs are merely speaking of “income”, which is typically higher than “taxable income” (up to a quarter in case one is at the lower end of the highest 30% tax slab) mentioned in the ministry’s December circular and second, they are silent on “self-declaration” of income by the consumers.

Sources said whether or not the consumers defined as above declare their income, the government would get to know of his/her income from their Aadhaar-seeded bank accounts and stop giving LPG subsidies if the income is found to be above the threshold.

“You have submitted your Aadhaar number with us and the same is with the bank. IndianOil would track your account and if your total income is more than Rs 10 lakh a year, subsidy would automatically be stopped,” said a South Delhi-based distributor.

Currently, there are about 270 million households in the country and 163.5 million domestic LPG connections. Nearly 3% of the total households or 8.1 million have an annual income level of more than Rs 10 lakh, according to the all-India survey for FY15 by Delhi-based People Research on India’s Consumer Economy (PRICE). However, taxpayers with an annual taxable income of more than Rs 10 lakh as per the tax authorities’ data basis is just about 2 million.

The crash in global crude oil prices has brought down the subsidy amounts drastically. Currently, a subsidised domestic LPG refill costs Rs 419.22, while its price sans subsidy is Rs 575 in the national capital, much lower than around Rs 1,000 per refill in early 2014. Coupled with this, the government’s efforts to reduce the subsidy are also helped by the success of the direct benefit transfer (DBT) scheme on LPG (PAHAL). As of January 1, 2015, when PAHAL went pan-India, the number of registered LPG consumers stood at 181.9 million. Thanks to the scheme that restricted LPG refills to 12 a year and led to transfer of the subsidy directly to the bank accounts of intended beneficiaries, the number fell to 148.5 million by April 1.

Of course, the connections have since swelled to 163.5 million, partly because commercial users of LNG, a fraction of which used to be disguised as household consumers, have come clean.

The “GiveItUp” campaign launched by Prime Minister Narendra Modi in March 2015 has led to 6.5 million consumers surrendering their LPG subsidies. This has resulted in provisions of LPG connections to more than 5 million rural households, according to the petroleum ministry.

In the first nine months of FY16, the government has forked out Rs 12,093 crore towards subsidising domestic cooking gas. The subsidy was Rs 36,580 crore in FY15 while it was Rs 46,458 crore in FY14.