Look, I gave up my LPG subsidy and I’m proud of it: latest upscale status update

As on April 8, 1,91,632 Indane consumers, 40,212 Bharat Gas consumers and 89,491 HP consumers had given up their subsidy.

By: Khushboo Narayan

That subsidies meant for the poor are widely used by the well-heeled is well known. However, Indian households are slowly but surely defying that trend by giving up their LPG subsidy.

Following a drive to get the middle-class to forego their subsidised gas cylinders, more than 3.2 lakh people have taken the step, according to government website givitup.in. Of these, 42,350 are from Delhi and 5,840 from Mumbai.

Those who have given up the subsidy include the Ambanis, Gayatri Ruia, Pallavi Kotak and the lesser-known Almeidas from Santacruz. India’s top corporate groups — the Tatas and Reliance Industries, besides Adani and Vedanta — have also asked their staff to give it up, while Prime Minister Narendra Modi, in a recent speech, urged staff of state-owned banks to do the same. Even friends have been bragging on WhatsApp groups about “giving it up”, and urging others to do the same.

As on April 8, 1,91,632 Indane consumers, 40,212 Bharat Gas consumers and 89,491 HP consumers had given up their subsidy.

However, that still amounts to only 0.2 per cent of the 16 crore LPG connections in the country. Still, every single consumer willing to forego subsidy helps in paring the fiscal deficit. The total subsidy (2013-14) on LPG was Rs 46,458 crore, accounting for 25 per cent of the overall fuel subsidy burden of Rs 1.39 lakh crore.

Indane says that till now, its total annual savings due to consumers giving up subsidy voluntarily is Rs 114.98 crore, while the total savings for Bharat Gas is Rs 24.12 crore. For HP, it is Rs 53.6 crore.

Last month, while speaking at an energy conference, Modi said that as many as 2.8 lakh people had responded positively to the government’s “give it up” campaign, which would lead to a saving of at least Rs 100 crore. On April 2, Modi, while speaking to bankers in Mumbai, asked banks and industrial houses to request their employees to join the campaign.

“The government’s initiative to get people to give up LPG subsidy is futile because it won’t be possible for everyone to give up subsidy. But corporate honchos who can afford gas at full price should definitely give up LPG subsidy… In my house, we have a piped gas connection,” Sanjay Nirupam, Mumbai Congress chief, said.

Following Modi’s push, several corporate houses joined the campaign.

“In keeping with (the) tradition of supporting the national interest, Tata companies are requesting those employees who can afford to do so to consider whether they may wish to voluntarily give up the use of subsidised LPG,” said a press release issued by the group on March 31.

On Wednesday, Vedanta Group asked employees who can afford to manage without gas cylinder subsidy to voluntarily surrender it. Similarly, Reliance Industries, too, has issued an appeal to its employees.

What could help the government in this drive is the timing. Thanks to the steep fall in LPG prices, in Mumbai, the subsidy per 14.2 kg cylinder is Rs 180. Even if a family uses up its full quota of 12 cylinders in a year, they sacrifice Rs 2,160. But in January 2014, the per cylinder subsidy was a hefty Rs 840.

Not only was the subsidy bill bloated then, a large part of this was not reaching the intended beneficiaries, prompting the government to move to the direct cash transfer scheme. According to the Economic Survey 2014-15, the bottom 50 per cent of households (the poorest half) consume only 25 per cent of LPG. A 2013 IMF staff paper shows that the bottom 3 deciles gain very little from subsidised LPG. Their monthly welfare gain from LPG subsidy is to the tune of Rs 10 per capita compared to Rs 80 for the top decile.

Source:: Indian Express