Weekly Current Affairs

LPG subsidy savings largely due to falling oil prices: CAG [Economy]

  • About 92 per cent of the Rs. 23,300-crore savings in subsidy payouts by the Petroleum Ministry in 2015-16 was due to the sharp fall in oil prices, the Comptroller and Auditor- General of India has found.
  • The subsidy burden over the period from April 2015 to December 2015 was lower than that for the comparable period in 2014 by Rs. 23,316.21 crore.
  • However, this was a combined effect of decrease in off-take of subsidised cylinders by consumers (Rs. 1,763.93 crore) and lower subsidy rates arising from the sharp fall in crude prices (Rs. 21,552.28 crore) in 2015-16.
  • While implementation of PAHAL (DBTL) Scheme coupled with the ‘Give it Up’ campaign has resulted in the reduction of offtake of domestic subsidised LPG cylinders, the resultant subsidy savings was not as significant as that was generated through fall of subsidy rates.
  • This comes against the backdrop of the Centre’s claims that it has saved about Rs. 22,000 crore due to the ‘Give it Up’ campaign, coupled with the direct bank transfers of the subsidies.
  • CAG’s figure of saving of Rs. 1,764 crore due to lower offtake of LPG cylinders was based on actual numbers while government’s calculations were estimates.
  • The CAG report also found that the government still has a long way to go in fully eradicating duplicate/fake/ghost accounts.
  • The report found several instances of intra-OMC duplication (where a single Aadhaar number or bank account number was used for multiple LPG connections), and many instances of consumers receiving more than mandated 12 subsidised cylinders a year.