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Saturday, 23 April 2016 00:00
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With over a crore responding to the PM, a big victory

 

Though most, including this newspaper, were sceptical of Prime MinisterNarendra Modi’s #GiveItUp campaign, with 1.13 crore households responding to his exhortation to relinquish their LPG subsidies, the numbers are truly impressive. If you take the number of LPG consumers as 15 crore at the beginning of his campaign—to give each LPG cylinder where the customer forgave his subsidy to a poor rural woman who endangered her health by using firewood for cooking—that means well over 6% of people have responded. This is no mean achievement in a country where even the rich hold on to their ration cards to get a few hundred rupees of subsidies each month and, as the drive to crack down on illegal cylinders showed, many were registering 3-4 cylinders under different names to avail the subsidy.

Certainly the subsidy saved is smaller compared to the government’s other big move of eliminating fake users—this reduced the number of active consumers from 18.2 crore to 14.9 crore and allowed the government to claim a saving of R14,762 crore in FY15. It is also true that while the subsidy looked larger when crude oil prices were at over $100 a barrel, they are much smaller today. Equally, while removing 4.4 crore people from the list of those availing an LPG subsidygives a big boost to savings right now, once more customers are enrolled—particularly in far-flung rural areas—as oil prices start rising, the subsidy will once again balloon unless the government is strict about imposing a cap on the subsidy, with a relaxation for those in rural areas and with lower incomes by linking this with direct cash transfers to their Aadhaar-seeded bank accounts. Many more can also be weaned off subsidies if the Prime Minister is able to deliver on his plan for gas grids as piped natural gas is not much more expensive than even un-subsidised LPG (http://goo.gl/pfoI3g). While that is in the future, for now, the Prime Minister has showed that a masterful communicator is a great asset in the battle to reduce subsidies and to push economic reforms—if there is a complaint, it is that the Prime Minister has not used his skill often enough over the past two years.

 
 
 

 

 

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