Page 20 - BPCL Journeys-Give It Up Special

T
he first day of last year marked the nationwide roll-out
of the modified Direct Benefit Transfer for LPG (DBTL)
scheme (also known as PAHAL). The scheme was launched
with the objective to prevent diversion of subsidised LPG,
by transferring the subsidy amount directly in the bank
accounts of the consumers. With more than 14.74 crore
LPG consumers enrolled under the scheme (90 per cent of
the active number base), it has become the world’s largest
cash transfer scheme and has significantly reduced subsidy
leakage towards non-domestic uses.
Subsequent to the implementation of DBTL, which allowed
domestic LPG cylinders to be sold at market price, the
government launched the ‘Give It Up’ scheme in March 2015.
The scheme was aimed at urging well-to-do households,
who can easily afford LPG at market price, to give up LPG
subsidy, in order to extend the subsidy benefits to poorer
households, increasing fiscal As
result of an intensive awareness campaign, nearly 57 lakh
beneficiaries have voluntarily given up their LPG subsidy.
This translates to an annual subsidy saving of Rs. 940 crore
for the government, at prevailing prices and consumption
trends. though is significant it
represents a mere 3.6 per cent of the active consumer base.
In comparison, a study conducted by the Council on Energy,
Environment and Water (CEEW) in 2014 establishes that
the richest 15 per cent of Indian households can easily
be weaned of the subsidy, as the full market price (then
Rs. 950 per cylinder) is well within their affordability limits.
At present, these households account for 25 per cent of the
active consumer base. The study also highlights that the
richest 10 per cent households in India corner 22 per cent

of LPG subsidy, while the bottom 50
per cent households together receive
only 30 per cent of LPG subsidy. Thus,
the government’s move to target
beneficiaries excluding
households from the subsidy net is well-
founded and timely. The government
has planned to use taxable income
(greater than Rs. 10 lakh per annum)
as the basis for exclusion and self-
declaration of income as the means for
identification. While this is a step in the
right direction, the modalities of such
an exclusion approach need further
consideration. For instance, even
though the LPG subsidy is given on a
household basis, the announcement
suggests that the income threshold
is applicable to individual incomes
and not that of the entire household.
Additionally, though self-declaration
is a useful form of policy ‘nudge’, the
success relies entirely on the integrity
of the respondent. To overcome this
challenge, should the government
consider enforcing the scheme by
linking LPG consumer data with
the PAN number? Moreover, less
than 3 per cent of India’s population
pays tax a
proportion under-reports taxable
income. Thus, exclusion based on
reported income alone would not be

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JOURNEYS

2015-16

a NEW WAVE OF
understanding