Chief Economic Adviser (CEA) Arvind Subramanian shared data on Thursday that suggests that before the introduction of the Direct Benefit Transfer scheme (DBT) one in four subsidised LPG cylinders were going to “ghost beneficiaries.”
The elimination of ghost beneficiaries is estimated to have saved the government Rs. 12,700 crore on its subsidy bill in 2014-15, he said.
The savings during the current year are estimated at Rs. 6,500 crore. He said contrary to the government’s expectations the sales of commercial LPG rose after the shift only marginally — by 6 per cent.
“Essentially, what we find is that on an average, the DBT scheme has reduced subsidised domestic LPG sales by about 25 per cent,” Dr. Subramanian said. He was speaking at a UNDP conference call in New Delhi.
He said the DBT was thus a “game changer” for India.
“DBT is important not only for fiscal savings … if the government can deliver these services it would legitimise the state, it would arrest the ongoing trend of de-legitimisation of the state the world over.”
Savings from the shift to the DBT would be even greater if the tax policy could be rationalised, the CEA said. This is because a huge chunk of the difference between the subsidised and the market prices of LPG is accounted for the various central and State taxes.
“Big chunk of the 32 per cent difference in the subsidised and the market prices is taxes… Had the tax system been more rational the fiscal savings accruing from the shift to DBT for LPG would have been greater.”
He, however, was not in favour of using DBT for kerosene or other more complex consumption commodities.
