In 2013 there were 14 crore LPG consumers. That is about 60% of the population.
Jan 2016 subsidy for taxpayers who earn over 10 lakh annually will not receive subsidy. Since most studies are Delhi-centric or at the maximum Cow belt centric it is believed that the annual saving from Delhi alone would be 1,167 crore. Sounds good right but I wonder.
The govt. Allowed 9 subsidized cylinders’ per family, and the amount was sent directly to the account of that was about Rs.4000/- per year/family — this amount saved too.
The LPG subsidy was for the benefit of the rural poor, where the consumption was about
8 – 9% and the urban usage is 62%. The issue is the abuse of the subsidized LPG that is using it as cars instead of petrol to overcome the expense of petrol. Using the subsidized domestic LPG commercially instead of the more expensive commercial ones.
When we say subsidy somebody is paying the difference, could be the government or any other public body, so that the price of a commodity or service remains low or competitive. It could directly be a cash grant or tax break.
Let’s see the rider
Amina – is a real person, her name is real she lives in Santa Cruz goa, has two ration cards, one in Dandeli and one in Goa. She is below taxation both places, she picks cylinders both places, sells at higher than what she buys but lower than full cost. So does giving her a subsidy make sense? BTW there are more women like Amina.
I pay an additional 4000/- month over the taxes while she earns 400x9x2= 3200/- a year which is unaccounted for that is black money.
What the government seems to tell me, that if I earn a decent amount, and not create black money I should be penalized for it. If I do not have loans or financial stress then I should be penalized for it.
Of course subsidizing LPG is a drain on national funds, but it might make more sense to wean the dependency on LPG particularly starting with younger families, I mean new homemakers, immaterial of whether they are rural or urban.
Tax relief can be given to families that shift from LPG to alternate cooking fuel. There are options like