Kerosene subsidy to be paid to beneficiary accounts from 1 April

02 Jan 2016


The union government on Friday announced the extension of direct benefit transfer (DBT) facility to kerosene subsidy as well, under which consumers will buy the cooking fuel at the market rate but will get the subsidy amount remitted directly to their bank accounts.

The government is set to roll out the scheme from 1 April this year.

The cash subsidy to be paid to users will be equivalent to the difference between current PDS price of about Rs12 and market rate of Rs43 per litre.

The move is expected to help curtail subsidy outgo for kerosene, which in 2014-15 was about Rs24,799 crore.

"Several state governments have come forward to implement direct benefit transfer (DBT) in kerosene in selected districts," an official statement said.

The scheme is set to be rolled out in Raipur, Durg and Bilaspur in Chhattisgarh, Panipat and Panchkula in Haryana, Shimla, Solan and Una in Himachal Pradesh and Chhatra, Giridih, East Singbhum, Hazaribagh, Jamtara and Khunti in Jharkhand.

Besides, the scheme will be implemented in Hoshangabad, Harda, Khandwa and Burhanpur in Madhya Pradesh, Amaravati and Latur in Maharashtra, Taran Taran, Pathankot and Mohali in Punjab and Pali, Jhunjhunu and Kota in Rajasthan.

"Where such transfer is introduced, the consumer will pay the un-subsidised price of kerosene at the time of purchase. Subsequently, the amount of subsidy will be directly transferred to the bank account of the beneficiary," the statement said.

"To avoid any inconvenience to the beneficiary through payment of un-subsidised price, subsidy shall be credited to eligible beneficiaries in advance during the initial purchase," it added.

It also said that the demand for kerosene for both lighting and cooking purposes has come down through improved implementation of the village electrification programme and the rise in LPG connections for the below-poverty-line households.

In order to incentivise states to implement DBT in kerosene, they will be given cash incentive of 75 per cent of subsidy savings during the first two years, 50 per cent in the third year and 25 per cent in the fourth year.

In case some states voluntarily agree to undertake cuts in kerosene allocation beyond the savings due to DBT, a similar incentive will be given to them. The calculation will be based on net savings in kerosene consumption at state level.

The government also clarified it has advised states to take all necessary steps to ensure that eligible and genuine beneficiaries particularly in rural areas are able to access their full entitlement of kerosene and special care should also be taken in areas having irregular power supply.

The centre will further consult the state governments before operationalising the scheme which will be reviewed after three months of implementation.

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