LPG-like DBT scheme for kerosene from April 1

LPG-like DBT scheme for kerosene from April 1

New Delhi: The Central Government will rollout a LPG-like direct benefit transfer (DBT) scheme for kerosene from April 1.

According to a government statement, the scheme will be implemented in selected 26 districts of eight states, including Chhattisgarh, Haryana, Himachal Pradesh, Jharkhand, Madhya Pradesh, Maharashtra, Punjab and Rajasthan.

Under the scheme, people will buy kerosene at market rate, but will get subsidy directly in their bank accounts. The cash subsidy to be paid to users will be equivalent to the difference between current Public Distribution System (PDS) price and market rate of kerosene.

The subsidy outgo for kerosene for the financial year 2014-15 was about Rs. 24,799 crore.

With a view to incentivise States and Union Territories to implement DBT in kerosene, it has been decided that the states be given cash incentive of 75 per cent of subsidy savings during the first two years, 50 per cent in the third year and 25 per cent in the fourth year. In case, the states voluntarily agree to undertake cuts in kerosene allocation, beyond the savings due to DBT, a similar incentive will be given to those States.

The National Sample Survey 2011-12 indicates that the total consumption of kerosene in the country, including both open market and PDS kerosene, was 71.30 lakh kilolitres.

Even though consumption of kerosene has been coming down over the years, 86.85 lakh kilolitres of subsidised PDS kerosene has been allocated to the states in the year 2015-16, which is higher than the total household kerosene demand in the country. Thus, there is evidence that some part of the kerosene allocation is diverted for non-eligible purposes.