Modi Govt’s “Give it Up” Scheme Helps in Reducing Oil Subsidy

Modi Govt’s “Give it Up” Scheme Helps in Reducing Oil Subsidy

There has been a substantial reduction in oil subsidy during 2015-16. Official figures available for the first nine months show that as against the oil subsidy bill (on diesel, LPG and kerosene) of Rs 76,308 crore for the 12 months period during 2014-15, the subsidy outgo in the first nine months of 2015-16 (April 1, 2016 to December, 31, 2015­­­) is Rs 22,085 crore—a clear indication of the fact that the year 2015-16 will close at a substantially lesser oil subsidy bill.

A major contributor to this subsidy reduction is the government’s “Give It Up” scheme. As on date more than 1 crore LPG customers have given up LPG subsidy under the ‘GiveItUp’ campaign.  The approximate annual subsidy saving is likely to be in the range of Rs. 1668 crore (approx.) assuming an average subsidy of Rs. 139 per cylinder. The ‘GiveItUp’ campaign is a continuous process and wide publicity is given for voluntarily surrender of subsidy.

LPG connections for welfare of poor women
LPG connections for welfare of poor women

To provide clean fuel to every household in the country, Public Sector Oil Marketing Companies (OMCs) propose to release 10 crore new LPG connections during 2016-19 in mission mode. Out of these 10 crore new connections, 5 crores will be released free of cost to women belonging to the Below Poverty Line (BPL) families under Pradhan Mantri Ujjwala Yojana (PMUY) Scheme.

Direct Benefit Transfer Scheme (PAHAL) scheme that was launched in the entire country from 1st January 2015 —wherein the subsidy on Domestic LPG is provided only to the eligible consumer directly in their bank account.

Further, on 28th December 2015, the Government decided that the benefit of the LPG subsidy will not be available for LPG consumers if the consumer or his/her spouse had taxable income of more than Rs 10,00,000/- during the previous financial year computed as per the Income Tax Act, 1961. The quota of PDS Kerosene has been rationalized over the years resulting in reduction in subsidy.

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Subsidy/ Under-recovery on Petroleum Products

Particulars 2012-13 2013-14 2014-15 9M, 2015-16
Diesel – Under-recovery of OMCs 92,061 62,837 10,935*
PDS Kerosene
Under-recovery of OMCs 29,410 30,574 24,799 9,993
PDS Kerosene and Domestic LPG Subsidy Scheme, 2002 741 676
Freight Subsidy (For Far-Flung Areas) Scheme, 2002 5 5 5
Total Subsidy on PDS Kerosene 30,156 31,255 24,804 9,993
Domestic LPG
Under-recovery of OMCs 39,558 46,458 36,580 8
PDS Kerosene and Domestic LPG Subsidy Scheme, 2002 1,989 1,904
Freight Subsidy (For Far-Flung Areas) Scheme, 2002 18 16 18
Total DBTL Subsidy (claims) 3,869 3,971 12,084
Total Subsidy on Domestic LPG 41,565 52,247 40,569 12,092
Total Subsidy/ Under-recovery on Petroleum Products 163,782 146,339 76,308 22,085

* up to 18.10.2014 only