The government plans to directly transfer money to the bank accounts of cooking gas customers even if they do not have Aadhaar identification.
The rollout will start with a pilot project in Andaman and Nicobar Islands by April, and will be extended to the rest of the country in a year.
The oil ministry will also seek Cabinet approval to end the sale of subsidised kerosene and proposes to transfer cash to the bank accounts of consumers.
The twin proposals will help remove malpractices in the oil industry - diversion of subsidised cylinders for commercial use and adulteration of diesel with cheap kerosene - and save the exchequer Rs 15,000 crore a year.
"The plan is to sell all LPG cylinders and kerosene at market rates by 2013-14 to discourage diversion, and it is possible even without Aadhaar numbers. All we have to do is to open no-frills bank accounts. States will be responsible for transfer of subsidy to individual bank accounts," said one official, requesting anonymity.
The matter was discussed on Monday at a committee chaired by Prime Minister Manmohan Singh, but the government deferred an announcement on Tuesday as it was not sure about the launch date, officials said.
The government initially wanted to begin direct transfer of subsidies from January 1. But it was later decided that the rollout be done from April after adequate preparation to avoid the kind of chaos and harassment that consumers faced when the government suddenly capped the supply of subsidised LPG cylinders in September.
"The ministry is also considering raising the cap on subsidised cooking gas cylinders. Six cylinders are not enough... In fact, the Nandan Nilekani-led task force was not in favour of capping. The task force did caution against such a move," a senior government official said on the condition of anonymity.
New Oil MinisterVeerappa Moily had instructed officials to raise the cap on cylinders a day before Diwali, officials said.
"The ministry did prepare a draft note for the Cabinet, but lack of funds proved to be the dampener. The proposal has not been shelved," said an official with knowledge of the matter.
The Nilekani-led task force wanted the government to transfer cash subsidies to the bank accounts of all customers. In the second phase, it suggested that subsidies be transferred to only the poor based on Aadhaar numbers, the official said.
The task force said in its report that "this step of capping the subsidised cylinders is not going to serve any of the objectives for which the task force was set up".
"Due to the new imposed limit on subsidised LPG under this phase, caution has to be taken as there may be a spurt in new connections and old, inactive connections may become active.
Further, it has the potential of becoming a hurdle for the next stage of reforms," the task force had warned.
After taking over the oil ministry on October 29, Moily had said that implementation of direct subsidy on kerosene and LPG would be his top priority.
Direct Transfer of Cash Subsidies on Kerosene 2012 (DTCK-12) has been launched in 11 states and these have been awarded Rs 100 crore each for voluntarily accepting it.
The rollout will start with a pilot project in Andaman and Nicobar Islands by April, and will be extended to the rest of the country in a year.
The oil ministry will also seek Cabinet approval to end the sale of subsidised kerosene and proposes to transfer cash to the bank accounts of consumers.
The twin proposals will help remove malpractices in the oil industry - diversion of subsidised cylinders for commercial use and adulteration of diesel with cheap kerosene - and save the exchequer Rs 15,000 crore a year.
"The plan is to sell all LPG cylinders and kerosene at market rates by 2013-14 to discourage diversion, and it is possible even without Aadhaar numbers. All we have to do is to open no-frills bank accounts. States will be responsible for transfer of subsidy to individual bank accounts," said one official, requesting anonymity.
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The government initially wanted to begin direct transfer of subsidies from January 1. But it was later decided that the rollout be done from April after adequate preparation to avoid the kind of chaos and harassment that consumers faced when the government suddenly capped the supply of subsidised LPG cylinders in September.
"The ministry is also considering raising the cap on subsidised cooking gas cylinders. Six cylinders are not enough... In fact, the Nandan Nilekani-led task force was not in favour of capping. The task force did caution against such a move," a senior government official said on the condition of anonymity.
New Oil MinisterVeerappa Moily had instructed officials to raise the cap on cylinders a day before Diwali, officials said.
"The ministry did prepare a draft note for the Cabinet, but lack of funds proved to be the dampener. The proposal has not been shelved," said an official with knowledge of the matter.
The Nilekani-led task force wanted the government to transfer cash subsidies to the bank accounts of all customers. In the second phase, it suggested that subsidies be transferred to only the poor based on Aadhaar numbers, the official said.
The task force said in its report that "this step of capping the subsidised cylinders is not going to serve any of the objectives for which the task force was set up".
"Due to the new imposed limit on subsidised LPG under this phase, caution has to be taken as there may be a spurt in new connections and old, inactive connections may become active.
Further, it has the potential of becoming a hurdle for the next stage of reforms," the task force had warned.
After taking over the oil ministry on October 29, Moily had said that implementation of direct subsidy on kerosene and LPG would be his top priority.
Direct Transfer of Cash Subsidies on Kerosene 2012 (DTCK-12) has been launched in 11 states and these have been awarded Rs 100 crore each for voluntarily accepting it.
Source:-The Economic Times
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