Spending
Never-ending woes of LPG consumers

It is not possible to anticipate all the unintended consequences of new LPG quota system. While it may reduce subsidy burden to some extent, consumers will continue to face enormous problems in securing their LPG supplies in the future

 
Even under the best of times, it has never been an easy task for LPG (liquefied petroleum gas) consumers to secure supplies from public sector oil company dealers. When consumers can get petrol anywhere anytime why should it be difficult to get an equally if not more important commodity like cooking fuel without much hassle?
 
The state-run oil companies have been subsidizing residential LPG ever since it was introduced as a cooking fuel. Since people were not familiar with LPG, it was found necessary to subsidize it. In the beginning the subsidy burden was manageable. Diversion of residential LPG was minimal or non-existent. However, as the difference between subsidized residential LPG and commercial LPG widened, diversion increased. At present it is more than 30% based on several studies. 
 
Currently the LPG burden to the central government has been more than Rs34,000 crore. On each LPG cylinder, the government has to dole out at least Rs468. To reduce the burden government has decided to limit the subsidized LPG to six cylinders per family per year as part of their recent big bang reforms. 
 
However, when a consumer takes delivery of LPG, he has to pay the full price and subsidy will be deposited into the bank account by the oil company. To ensure that the subsidy amount is not directed to wrong persons, the Aadhaar platform will be used. On paper this looks fine and easy. 
 
Mysore in Karnataka is one of the two districts to experiment with Aadhaar-based LPG delivery implementation on a pilot basis. According to the LPG dealers and oil company managers in Mysore, implementing quota system of six cylinders will be easy without any hassle. At this stage it is just a wild conjecture. 
 
Already some consumers who do not buy LPG for more than six months have to go through an elaborate process of registering with the dealer again. Only when the oil companies give their approval from the centralized Bengaluru head offices, their account will be unblocked to receive supply. The rationale of such a process which is an unnecessary harassment to the honest consumers is not easy to defend. 
 
If a house has a joint family or more than one family or multiple kitchens then they are eligible for a larger quota. How and who will decide this quota is not clear. Such discretion will certainly lead to bribing. Institutions like orphanages, schools with the mid-day meals, anganwadis are also eligible for additional quotas. 
 
How about those who do not have the Aadhaar number?  Will they be able to get the subsidy? Assuming some are not interested in the subsidy, can they get LPG supplies? Here again it is not clear at what price they will be able to get an LPG cylinder.
 
To put a stop to households having multiple connections from different public sector companies, an elaborate system using RR (number given by power companies) and also through the “Know Your Customer” formality was implemented. Many had to surrender the additional connections. Out of the blue, on 25th October the petroleum ministry decided to allow multiple connections and introduced one more price category called non-subsidized non-domestic exempt (NDEC ) which is about three times the subsidized residential price.  
The petroleum ministry should be congratulated for having allowed the multiple connections and to allow the consumers to buy from any company of their choice. This will certainly introduce competition among the oil companies for that segment where high price is not a deterrent. This has been one of the suggestions made by LPG dealers. 
 
Before the new policy of six cylinders, there were three prices for selling the same commodity LPG—highly subsidized residential, non-subsidized commercial and automotive. Now there are already three more new price categories announced for different consumer categories—subsidized residential consumers who will receive subsidy into their bank accounts for the first six cylinders, non-subsidized non-domestic exempt category and the third group consisting of schools, anganwadis, orphanages, etc. As different groups of consumers demand subsidized LPG, competitive politics may lead to some more price categories.  
 
As discussed above, the same commodity—LPG—is sold for six different prices. One cannot design a more perfect system to generate black money. The lowest priced LPG of around Rs29,000 per tonne is for residential consumers and highest price of Rs89,000 per tonne is for the automotive sector. Only in a society where there are honest saints, diversion of such highly subsidized commodity like cooking fuel which is in high demand can be avoided. 
 
To know more about what’s happening in this area, please click here.
 
To prevent the dealers from diverting subsidized LPG, oil companies have developed a complex system of receiving bookings only through their portals or through mobile phones. Since in the future a dealer is forced to sell LPG only at non-subsidized prices and subsidy is paid directly to the consumers, it is claimed that the dealers will not be in a position to misuse the subsidy system as in the past. We all know that even a complex computer system can be hacked. Unless the government implements a foolproof monitoring system dishonest dealers will succeed in gaming the LPG portal system. 
 
The only way out of this mind-boggling edifice of supplying LPG is to start the process of liberalizing the LPG market as recommended by several high-level committees. Instead, an even more complex system is being developed. There is another layer of complexity as a result of the Congress party chief Sonia Gandhi asking the Congress ministries to give two more cylinders at the subsidized price. As in the power sector, each political party will compete with one another to promise higher subsidy to residential LPG consumers. This will end up creating huge financial burden to states and they will not be able to pay the oil marketing companies. 
 
It is not possible to anticipate all the unintended consequences of new LPG quota system. While it may reduce subsidy burden to some extent, consumers will continue to face enormous problems in securing their LPG supplies in the future.
 

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COMMENTS

Babubhai Vaghela

4 years ago

Why only Govt Sector has to provide Clean Fuel LPG for Household use? In Privatisation Era why not Private Sector roped in?

Raghu

4 years ago

Our UPA2 Government is in a tearing hurry to implement its decision to withdraw subsidies it was providing on LPG Cylinders without having a system in place to prevent blackmarketing.This step is going to make all the middle class Indians suffer even more to obtain a LPG refill even if they are ready to pay the market fixed price as the Dealers will exploit this artificial shortage to their benefit.The re election of this Govt.is seriously in doubt in 2014 election due to this unfriendly steps against common man.

Sadanand Vinayak Nadkarni

4 years ago

surprising that we are talking about "hardships and subsidies" for domestic users. Why subsidize at all? No-one is even talking about Solar cookers-damn cheap and easily accessible almost all year through.Even in the city of Mumbai. my daughter was forced to use Solar cooker, when she shifted to a new flat and No gas cylinders for 11 months. The food tests excellent, never charred. People will not look at alternatives unless they are forced to, by removal of all subsidies--Dr.S.V.Nadkarni

REPLY

Dayananda Kamath k

In Reply to Sadanand Vinayak Nadkarni 4 years ago

then why is delhi govt giving free gas connections and stove to bpl card holders and increasing the subsidised cylinders to 9 and sonia gandhi is shouting from roof tops at evry election rally why the other party govt is not giving 9 subsidised cylinders. shila dixit e is forgetting that elections are due in delhi next year.and she is embroyled in cag cases. and is in hurry to regularise illegal colonies so that she can bribe the voters to vote for congress. and again suffer like delhi voters for selecting her 3 times on onion price commonwealth game etc

Sadanand Vinayak Nadkarni

In Reply to Dayananda Kamath k 4 years ago

Sir, you have answered your own querry.Yes. they are all rogues, not interested in the welfare of the country, but caring for their Vote banks.BUT WE SHOULD BE INTERESTED IN OUR OWN WELFARE. Solar cooking is very cheap,effortless,hyegenic and will save a huge amount of Foreign Exchange.Foerget politicians, work for yourself--Dr.S.V.Nadkarni

Vinay Isloorkar

In Reply to Sadanand Vinayak Nadkarni 4 years ago

Valid Point. I was too lazy to get into solar, but with energy prices soaring ( electricity and now gas ), hv got cracking on it.

Dr Paresh Vaidya

4 years ago

Thanks for highlighting at least SOME of the problems. Decisions from Finance Ministry came too fast and the Oil Comapnies were not ready for their part. Their portals did not have functions give what they advertised in big letters in the newspapers. ( For example my Gas dealer did not know what a Field Officer is supposed to be!!) After thousands of people cancelled second connection by 15th Sept, as required, they withdrew the dictat. Then KYC drama and long queues, which was also withdraawn afer lakhs of man-hours were lost. One wondered, Are we out of Licence Permit Raj?

They could have thought the schemes carefully and come to the public. And now comes the cash subsidy. Govt is obsessed with cash subsidy in all fields. They could have rather increased prices by 100/200 Rs but spared the common man all this hassle of counting numbers and keeping track if his cylinders are booked by someone else. If someone does, he pays 900 Rs for is last cylinder !!

Dayananda Kamath k

4 years ago

the govt is morally and legally dutybound to provide petroleum products at concessional rate. because they overcharged the people for petroleum products to create a oil pool fund, till rajiv gandhi cme to power. in his first year in office he transfered around 17000 croes to general fund from this fund balance was lost in harshad mehta scam. the fund was squandered when it was most needed and for which it was created. now these reules are being made so that they can rake in money. otherwise even though whole world knows that jindal congress mp received 366 cyluinders in a year more than 1 cylinder per day why no pronbe is done and guilty is punished. the direct credit of govt subsidy and benfits to the individuals is also a foll proof conspiracy so that cag will not be able to audit it becasuse of of huge volume of transactions involved and they can rake in their moolah. instead of preventing leakages they are opening floodgates. if you can not monitor subsidy given to 100 people how you can monitor susbsidy credited to billions. this siple logic is ignored. it is nothing but bribing the voter by crediting money to vote tham back. hope the people of india and members of parliament will understand these things. god save this country.

Pradeep R Hattangadi

4 years ago

The government seems to be intent in complicating the system for the Mango man while it becomes a fertile ground for generating black money for the politicians and their cronies.

MK Gupta

4 years ago

By this wonderful and brilliant anti-people step. the govt. has opened the black market wide open. This action is enough to give the UPA-II's message regarding its true anti-mass image, while the political class ( and the all powerful cporrupt bureaucrats) whose unethical action this novel actin is stated to have been necessitated will continue to enjoy best of both the worlds as to procure any number of gas cylinders will never be any problem-and, that too, at no cost to them! What is strange is that, the govt. should remain unmoved despite the massive protests all over.

Vinay Isloorkar

4 years ago

8.11.12

This a signal of state control on its last legs.When I was growing up, the ration shop was an essential part of the middle class milieu. When we got our phone connection, the instrument had a marigold garland for a week.The postal services have been toppled by the couriers. We did not pay toll, but there were no raods.So on and so forth. Differential pricing/ discretionary quota are all fertile breeding grounds for corruption.The masses are wising up to all these tricks. This too shall pass!

subrahmanian s h

4 years ago

I'm not for the boneless wonder that is "Aadhar Card", as my personal identity and secrecy becomes public and available for misuse and possible scams.
Beware, now for Aadhar scams.
Are all LPG users having bank accounts?
You aren't able to get a SB a/c opened in PSU Banks.
Sure the Hell will open up and involve in breeding corruptions if credit isn't there ...?
Why this hell? Sure trhe waterloo for UPA.

How tobacco victims are downing the shutters of the industry that sold them cancer

Voice of Tobacco Victims, a Navi Mumbai-based NGO, has brought India to the forefront in the war on cancer-causing tobacco, and is showing advocacy gurus worldwide the way to fight the war against cancer

Amidst all the dust and tumult of the anti-corruption movement that raged throughout the country, a massive victory for the people of India has quietly gone unnoticed. People may be wondering why state after state is banning gutka in 2012. Why is the political establishment slamming its doors in the face of the massively influential and moneyed tobacco lobby? While the magnitude of the havoc caused by tobacco has been a matter of public record for many decades, it was dimly understood by the decision-makers until the victims of tobacco themselves started confronting them with the grim reality.

 

India is struck by a disaster of tsunami or earthquake proportions every single day. Over 3,000 persons (mainly middle age) die on a daily basis. Strangely, nobody in the administration seemed to care until March 2012. Tobacco users are hugely prone to getting cancer, respiratory illness, heart attack, stroke, etc. Ten lakh smokers and tobacco-chewers die every year from these illnesses in India—50 times more than non-tobacco users. About one-third of India’s population is hooked to tobacco. Of India’s 42 crore tobacco addicts, only about 28 crore are adults. About 14 crore are aged below 18 years, and they typically pick up the tobacco habit in the 6th or 7th standard.

 

The Voice of Tobacco Victims (VOTV) has been a game-changer in pushing for a ban on chewable tobacco products. On 31 May 2008, a small group of 10 cancer patients met with oncologists and cancer researchers at Mumbai’s Tata Memorial Hospital and said, “This is what tobacco did to us, we now want to save others!” This meeting was widely reported.

 

The crusading tobacco victims personally appeared before the state assemblies of six states in 2011-12, viz. Maharashtra, Karnataka, Kerala, Bihar, Madhya Pradesh and Chhattisgarh. Five of these six states went on to ban gutka and chewable tobacco products and all those hiked taxes on tobacco products. VoTV members (as the crusading tobacco victims became known), backed by 17 leading cancer specialists in various states, have been cornering chief ministers, health ministers and other decision-makers to sign pledges to eradicate gutka, khaini etc. Following their efforts, the gutka ban has been implemented by 15 states so far (the ban in UP and Uttarakhand will come into effect every soon).

 

VOTV has brought India to the forefront in the war on cancer-causing tobacco, and is showing advocacy gurus worldwide the way to fight the war against cancer. VOTV will not allow victims like Satish Pednekar, Deepak Kumar and Shafique Shaikh (the lead actor in Malegaon Ka Superman) to become faceless statistics; it compels administrations and the public to remember that they are unique persons like you and I, with wives and children who love them. The campaign, spearheaded by Healis-Sekhsaria Institute of Public Health and Tata Memorial Hospital shows people in the administration the face of their voters and tax-payers, who are suffering due to their failure to ban tobacco and its products.

 

Read: National Cancer Awareness Day: Look out for the warning signs

Photos of Tobacco Victims sensitizing various state assemblies etc: http://tinyurl.com/VOTV-campaigner-pix

 

The so-called war on cancer is largely a war on promotion and sale of carcinogenic tobacco products. For decades, this war has been fought with dry statistics. NGOs, researchers and scientists have been the face of this war, while victims were used for generating statistics. And so, the profiteering tobacco companies has had it easy, hiding behind “lies, damned lies and statistics” about employment and tax revenue given by tobacco, and of course, their lofty CSR (Corporate Social Responsibility) initiatives. No longer! Victims of every sort of tobacco usage will speak up, and rebut all the lies that are being spread by the profiteering tobacco industry. Having proven itself in India, the VOTV movement has spread to US, Russia, Indonesia, Bangladesh and Pakistan, where victims are now beginning to speak up.

 

In the world of public health advocacy, India has lit up a lamp, which now spread across the globe.

 

VOTV’s bottomline for terminal cancer victims: “Do not go gentle into that good night… Rage, rage against the dying of the light”—Dylan Thomas

 

For further details and contact details of the brains behind VOTV: Contact Krish 9821588114.

Voice of Tobacco Victims

A Campaign by Healis - Sekhsaria Institute for Public Health () in collaboration with Tata Memorial Hospital and other organizations

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COMMENTS

Sandeep Reddy Geetla

4 years ago

There should be "stop smoking" campaign than waging war over tobacco companies.Did anybody force you to amoke? You succumb to temptation of smoking at first place and then do riots against tobacco companies.Not fair.

Prima facie nexus in Aircel-Maxis deal involving Maran: SC

The apex court which perused two reports filed in a sealed cover by the CBI, has said that the allegations levelled and investigations prima facie indicates a nexus between former minister Dayanidhi Maran and a Malaysian businessman

New Delhi: The Supreme Court has said the Central Bureau of Investigation (CBI) probe into the allegations in Aircel-Maxis deal involving former telecom minister Dayanidhi Maran and a Malaysian business tycoon "prima facie indicates a nexus", reports PTI.

 

A bench of justices GS Singhvi and KS Radhakrishnan, which perused two reports filed in a sealed cover by the CBI, said, "The allegations levelled and investigations prima facie indicates a nexus."

 

The CBI told the court that it has completed the domestic investigations into the deal but the overseas probe was being delayed due to the influence of the company's owner in Malaysia who is "powerful politically".

 

"We have completed the domestic probe and have to complete the investigation about the deal in Malaysia and Mauritius. Letters Rogatory have been sent to those countries.

 

"The gentleman in Malaysia who is involved in it is economically powerful and he is also powerful politically," the agency's counsel KK Venugopal submitted without taking any names.

 

The submission was made by Venugopal, who was reading the relevant portions of CBI's fresh progress report on its investigation into the 2G spectrum scam.

 

Maran has been accused of "forcing" Chennai-based telecom promoter C Sivasankaran to sell the stake in Aircel to a Malaysian firm Maxis Group in 2006 owned by Kuala Lumpur-based business tycoon T Ananda Krishnan.

 

The agency submitted that overseas probe was important to track the money trail as the funds for the deal had come through Mauritius.

 

"We have to go into the source of fund. Information is that the money came through Mauritius," the CBI counsel said adding that "we want to show the link on the source of money to show the quid-pro-quo involved in the deal."

 

When the bench wanted to know "why there was a delay in probe in Malaysia and Mauritius," the CBI said those countries are repeatedly seeking clarification on one or the other issues.

 

The bench also said if there was any effort by powerful or influential or CBI was working under any influence then "this must be stopped".

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