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Thursday, 11 June 2015 01:07
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Asking LPG dealers to convince clients to give up LPG subsidy is illogical; govt should restrict the sops

 

Given how prime minister Narendra Modi is behind the scheme, it is not surprising the oil ministry should be leaning on PSU oil firms who, in turn, are leaning on their distributor network to convince people to give up their LPG subsidies. Distributors, who also comprise the handicapped and war widows, have been told to, within a week, organise campaigns to convince their clients to give up their subsidies. This involves organising, if you please, painting competitions, setting up kiosks, planning road shows, tableaus and involving important people in the locality. This sounds very good on paper, but apart from the fact that dealers don’t have the physical or financial resources to carry out such campaigns, does the oil ministry actually expect dealers to antagonise their customers by rubbing in their face that they are committing a crime, as it were, by taking a subsidy? Rubbing your consumer the wrong way should be a no-no even for a PSU firm. And given that just 5,15,149 persons have given up their subsidy—at the current subsidy of R208.68 per cylinder and with the subsidy allowed for a maximum of 12 cylinders a year, that’s a saving of just R130 crore, a tiny fraction of the R36,580 crore LPG subsidy bill in FY15—after the poor response to the PM personally exhorting people to give up their LPG subsidies, what chance do the lowly LPG dealers have?

A more sensible solution is emulate the UPA and start cutting subsidies—in exactly the way the UPA did with diesel, the NDA has to raise LPG prices by a small amount each month; it is ironic that the NDA should take credit for deregulating diesel prices when the hard work was done by the UPA, and take no action at all on LPG. Indeed, now that most of the LPG base has been linked to Aadhaar-linked or unlinked bank accounts, why not restrict the subsidy only to the bottom 40% of the population? If the government can’t do its own work, passing it on to LPG dealers is unfair, and won’t help either.

 
 

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