New Delhi: After halting new cooking gas connections and extending refill booking periods, oil marketing companies (OMCs) are turning to tax data to weed out ineligible beneficiaries of the direct benefit transfer scheme for LPG (DBTL), even as raise the possibility of a fuel price hike.
Indian Oil Corp. Ltd, Bharat Petroleum Corp. Ltd and Hindustan Petroleum Corp. Ltd have started sending text messages to users in this respect, three officials aware of the development said. The messages, which cite the users’ income tax data showing annual income of ₹10 lakh and above, state that the subsidy may be discontinued since they are ineligible.
An SMS from Indian Oil Corp. received by several LPG customers said: “Dear LPG consumer, as per available income-tax records, your (or a linked family member’s) gross taxable income exceeds the prescribed limit of ₹10 lakh. If you wish to dispute this, please contact the toll-free number 1800-2333-555 or register your grievance on the portal of your respective oil marketing company within seven days of receipt of this message. If no response is received within the stipulated period, the LPG subsidy may be discontinued thereafter.”
On Monday, Bloomberg that India is considering emergency steps to shore up foreign exchange reserves, including curbing non-essential imports like gold and electronic goods, and hiking fuel prices. Officials in the Prime Minister’s Office and the finance ministry held discussions with the Reserve Bank of India on several measures, the report said.
However, there is no proposal to provide a bailout package or fiscal support to OMCs despite mounting losses on fuel sales, said Sujata Sharma, joint secretary in the petroleum and natural gas ministry, while acknowledging that these companies are indeed facing steep losses. The ministry is working on austerity measures to conserve energy, Hindustan Times reported, suggesting that an increase in retail fuel prices may be in the offing. Meanwhile, economists and farmer groups have said agriculture was a prime sector that could scale back diesel consumption. Apart from private, public and commercial transport, diesel is used in agriculture and industries. India’s farm sector accounts for about two-fifths of the country’s annual diesel demand of about 92 million tonnes.
Though the DBTL scheme is meant for persons or households with annual incomes below ₹10 lakh, the rule was rarely enforced. The subsidy amount per cylinder under the scheme is around ₹30 per cylinder.
The government has to piped natural gas and electric cooking, apart from curtailing commercial LPG supplies, and raising commercial cylinder prices by a record ₹993. The move to plug subsidy leakages is the latest attempt on this front, at a time when the Iran war has squeezed gas supply and raised import bills.
According to a ministry official, who spoke on the condition of anonymity, the ₹10 lakh income cap already existed. “Such an exercise was carried out around 2016-17 also. It is a fresh attempt to ensure that the economically under-privileged people are able to avail of the benefits and those who are out of the criteria are removed,” the official said.
To be sure, DBTL is different from the Pradhan Mantri Ujjwala Yojana (PMUY), a flagship welfare scheme. DBTL beneficiaries, numbering 333 million, buy cylinders at the regular uniform retail selling price, and the government subsequently reimburses the subsidy to their bank accounts. Similarly, the incentive under PMUY is provided through the bank account, wherein the government pays ₹300 subsidy to 100 million beneficiaries after purchase.
The DBTL subsidy goes directly to the consumers, and dealers have nothing to do with it, said Jagdish Raj, president of Uttar Pradesh Circle of the All India LPG Distribution Federation. “It generally varies around ₹25, 28 may be ₹30 per cylinder. This must be a way to tighten the scheme and support only the required beneficiaries. This was also done about 10 years back when the government had launched the initiative of ‘Give It Up’ to encourage economically well-positioned consumers to give up their subsidy and contribute to the economy,” Raj said.
Queries mailed to the union ministries of petroleum & natural gas and finance, Indian Oil Corp Ltd, Bharat Petroleum Corp Ltd and Hindustan Petroleum Corp Ltd remained unanswered.
The official mentioned above said that the subsidy support is not uniform, and varies between ₹25 and ₹30. “In case a consumer is in a remote location, he would receive a higher amount compared to one in an urban area. The exercise is being undertaken by all the OMCs,” the official added.
In a written reply to a question in Rajya Sabha, Union minister of state of petroleum and natural gas Suresh Gopi said on 23 March that under the DBTL (PAHAL) Scheme, domestic LPG cylinders are sold at the uniform retail selling price and applicable subsidy is transferred directly into the bank account of the eligible consumers.
Meanwhile, the Centre’s subsidy outgo under the DBTL scheme has declined over the years. In FY25, the actual outgo was ₹375.28 crore under DBTL, way lower than the budget estimate of ₹1,500 crore. It has come down significantly from the budget estimate of ₹35,681 crore in FY21, and the actual outgo of ₹23,765.25 crore. On the other hand, outgo under PMUY has increased ₹9,235.42 crore in FY21 to ₹12,691 crore in FY25.
The subsidy crackdown comes amid anticipation of a price hike. Domestic LPG prices were last revised in March by ₹60 per cylinder, and according to the government, state-run OMCs are incurring monthly losses of about ₹30,000 crore due to stagnant petrol, diesel and LPG rates in India.
Prashant Vasisht, senior vice president and co-group head, ICRA Ltd said: “The oil marketing companies are incurring substantial losses on the sale of auto fuels and domestic LPG owing to high international crude oil and product prices. ICRA estimates that at crude price of $120-125/barrel and considering the past 10-year average crack spreads of auto fuels, oil marketing companies incur a loss of about ₹1000 crore daily on the sale of auto fuels and domestic LPG. This high level of loss is unsustainable and would need to be addressed if the scenario of elevated crude oil and product prices persists for an extended period.”
The West Asia war and the blockade of the Strait of Hormuz have severely impacted India’s LPG supplies, as about 90% of its cooking gas imports previously came from West Asia. Now, the government has diversified to other sources, including the US, Canada and Norway.
Vijay C. Roy contributed to this story.