Saturday, November 14, 2015

Why Direct Benefit Transfer is difficult to implement in Kerosene

Direct Benefit Transfer(DBT) has been expected to be introduced in Kerosene to minimize leakages. Direct cash transfer to bank accounts will be introduced instead of providing subsidized Kerosene through Public Distribution System. But applying this system in LPG gas was feasible as Oil Market companies have a record of their consumers but when it comes to Kerosene it is first sold to dealers and then it goes to Consumers. 

The quota limit of kerosene for different consumers varies depending upon whether he has a ration card of Above Poverty Line, Below Poverty Line and Antyodaya Anna Yojana. So a big challenge would be to identify the real users and paying them through Aadhaar.

In the last financial year, total quantity of petroleum products consumed were 158 million tonnes out of which 7.1 was Kerosene.

In is being said that the Centre will direct states to provide subsidy in Kerosene to only those houses which are still unelectrified.

In June 2011, kerosene price was Rs. 14.83 per litre which at present is Rs. 14.96. So a loss of Rs. 25.96 on per litre basis have to be taken up by Oil Marketing Companies which is the reason that in Financial Year 2014 the kerosene subsidy under recovery amounted to around Rs. 30,000 crore and in the first half of this year the amount stands at Rs. 14,000 crore.

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