The system which has been in force for “subsidizing” the liquefied petroleum gas (LPG) price is that the LPG consumer pays the administered price. For instance, when the price of the cylinder was Rs. 960/-, the consumer was paying Rs. 461/-; the subsidy on each cylinder was Rs. 499/-. Presumably, the oil marketing companies (OMCs) were claiming from the Government the subsidy amount representing the difference between their “market price” for the cylinder and the price billed for the customer. The subsidy amounted to more than 1 lakh crore rupees each fiscal. One would suppose that this was being paid by the Government at quarterly / half-yearly intervals after, hopefully, the Ministry had exercised necessary checks on – verification of the amounts claimed with reference to the documents and accounts of the OMCs. No consumer, to our knowledge, has expressed unhappiness over the procedure as such, so far as he or she was concerned, or complained that he or she was being deprived of the thrill and happiness in paying the full market price of the cylinder demanded by the OMCs and getting the subsidy amount directly credited to his or her bank account. The only parties, so far as we can see, who were at a “disadvantage” were the “poor” OMCs on three counts. 1. There was delay in their getting their subsidy amounts, which they were grumbling was affecting their financial position; 2. The market prices based on which they were claiming the subsidy from the Government were liable to be examined for their veracity and correctness; 3. As the subsidy payments made to them were accounted for in the Consolidated Fund of India, they were liable for audit by the Comptroller and Auditor General of India, who could examine their accounts and documents in the course of audit.


It eludes one’s understanding why the Government wants to replace the existing system with a new one which is nothing but an albatross around the necks of the customers, the gas distributors and the banks. Following an alleged success of the Direct Benefit Transfer (DBT) in 20 districts the Government decided to go for a massive roll out in 209 districts from September 1, 2013 in a phased manner for cash subsidy payment. The Finance Minister (FM) said, after approval of the extension of the scheme by the Cabinet Committee on Economic Affairs, that by January 1, 2014 a huge proportion of LPG beneficiaries would be covered by the DBT system. They will get their subsidy credited one month in advance; they can get their LPG cylinder for a month following that. Under the scheme, a sum of Rs. 435/- will be credited to the account of the LPG consumer; the moment he or she books a cylinder the consumer will use this money to buy a 14.2 kg cylinder at market price. The moment the refill is bought, another sum or Rs. 435/- will be credited to the Aadhar linked bank account of the consumer.


In order to get a feel for the numbers involved, we note that there are 1.70 crore domestic consumers in the state of Andhra Pradesh alone, and 80 lakh cylinders are delivered every month. Are the gas distributors equipped to advice the banks to credit the Aadhar linked bank accounts of this astronomical number of customers with the subsidy, the moment the cylinder is booked, and with the subsidy amount a second time the moment the refill is bought? One does not know what is meant by the magic phrase “the moment” which the Government has pulled out like a magician pulling out a rabbit from the hat. Einstein has taught us that even a light signal which travels the fastest takes a finite time to travel from one point to another! Where from will all these thousands of distribution outlets get funds to equip themselves with additional accommodation, computers, trained staff, furniture, etc. for them to handle all this enormous work?


Of the 1.70 crore domestic LPG customers in the state of Andhra Pradesh, a large proportion will be those belonging to the category of wage earners, lower middle class, etc.. Many of them may not have a bank account. Even if we take an absurdly low figure of 10% among the 1.70 crore customers who have to open bank accounts afresh, the number comes to 17 lakhs. Are the banks geared to handle such a large number of new accounts to which the subsidy amount is to be credited, and from which the only other transaction will by and large be the withdrawal of that amount? How are the banks going to equip themselves for this gigantic task which should be a totally futile one so far as the banks are concerned?


As far as the consumers are concerned, it is not an afternoon stroll for them to open the bank account and to withdraw the subsidy credited to their accounts. Many of them have to spend every working day at least a couple of hours to commute to their work place and to commute back home, beside their eight hour duty. How are they going to find the time for going to the bank to draw the subsidy every time they have to get their refill for their cylinder? The whole thing is bizarre and insane beyond belief. The FM clarified that the scheme is not for the benefit of the consumer but is aimed at checking subsidized LPG meant for household use finding its way to black market or commercial establishments. The FM says that the Government estimates that it could save Rs. 9000 crore annually. As usual, no details of how this is arrived at have been given. But one can be sure that Government has presumed that the banks will be doing all that service gratis, and so will the gas distributors. In any case, the latter will recover their expenditure by an increase in the service charges billed to the consumers, while the banks will have to claim service charges in respect of each account, which may in total to hundreds of crores annually. Of course the environmental degradation caused by the enormous amount of electronic and other waste generated by all this business of credit to the bank accounts of the customers and withdrawals there from on withdrawal forms etc. is of no concern to the Government, which in any case cannot see beyond its nose at any time or any issue! These are all part of the GDP growth process!


Let us have a ground report on the DBT cases. The print media have reported that public complaints have been piling up against the DBT scheme for domestic LPG consumers; but, as is only to be expected, there is no grievance redressal mechanism to resolve them. The shoddy implementation of the scheme is causing harassment to thousands of LPG customers in both Hyderabad and Ranga Reddy districts, with the gas agencies, oil marketing firms, banks and Unique Identification Authority of India (UIDAI) blaming one another – and the Fin Min being supremely indifferent to the harassment caused to these thousands of customers who never wanted any of this rigmarole. The OMCs blame gas agencies for not updating the subsidy amount on line leading to discrepancies in the subsidy amount credited. The UIDAI and banks say that they are just facilitators, and the gas agencies claim they are only distribution agencies and cannot be faulted for the DBT rules. The glitches and anomalies abound.


The subsidy was Rs. 498.76/- when the price of the cylinder was Rs. 960/- in August 2013. With the price having been hiked to Rs. 1,024.50/- early September 2013, the subsidy was reduced to Rs. 456.98/- when it should have gone up! Furthermore, many of the consumers have not received the subsidy amount even weeks after the delivery of cylinders. So much for the FM’s announcement of the instant credit of the subsidy to the customer’s bank account.


Apart from the OMCs the other (unexpected) beneficiary of the DBT scheme is the state government which is earning hundreds of crores of rupees every month by levying VAT (value added tax) on the market price of the cylinder which is Rs. 1,024.50/- (as the supply is billed at the market price), where as previously VAT was being charged on the subsidized price of Rs. 412.50/-. The customers are bearing an additional burden of Rs. 60/- on each cylinder. The customer has the alluring prospect of having to bear a further burden on this account as the OMCs are expected to increase the market price to Rs. 1,200/- by October 2013, obviously in line with international prices. Who is there to stop them or verify what they claim? The Centre wrote to the states urging them not to impose VAT on the market price of the cylinder, but there is no response from them. Why should they agree when the mess has been created by the Centre without consulting any of them?


All this confusion, harassment of consumers, enormous work load on the gas distributors, banks, etc., is ostensibly to save Rs. 9000 crores which is not even 10% of the expected subsidy payment to the OMCs annually. It is not farfetched or in bad taste to say that all this must be the product of an addled and / or fevered brain.


I should hurry to end this long infliction on the kind readers with a little excursion into that earth shaking project for solving the identification problems of the citizens of the country – the Aadhar Card. Writing under the caption “Parliamentary Supremacy under Attack”, P. Rajeev, MP says that the executive’s attempts to circumvent the legislature and the growing influence of money power in deciding elections,have eroded people’s legitimate aspirations. A functioning of democracy has been corroded in a systematic manner. Under the misguided notion that the “policy decisions” of the executive are the ultimate in governance, the Government refuses to see anything wrong doing in the 2G scam, CWG scam, Coalgate scam etc. The Supreme Court had occasion to observe, in the course of hearing of the coal allocation case, that there is nothing sacrosanct about the so-called policy decisions, which, like all actions of Government should be in the interest of the country, the people and be within the parameters laid down by the Constitution and the laws of the land: the interests of a private person(s), organization or a party cannot be identified with the interests of the people or the country.


Coming to brass tacks, Rajeev has pointed out that the executive has taken most policy decisions without the concurrence of the supreme legislative body of the country. A classic example of this is the Aadhar, a much hyped programme of this Government. The Aadhar card is regarded as a pre-requisite for getting Government benefits. DBT is based on Aadhar numbers. Bank accounts are to be linked to them. But is there any legislative backing for Aadhar? Rajeev says that the UID bill is supposed to be the law for the implementation of Aadahar, but (readers kindly note) the Parliamentary Standing Committee has submitted its reports with serious objections to most of the provisions of the draft bill. The Government had kept it in cold storage and was not likely to move the bill in any form for consideration and passing.


But Aadhar has already become a reality and has caused untold misery and harassment to thousands of citizens. How did this atrocity happen? The UIDAI would enroll the entire Indian resident population. This signals the emergence of an information infrastructure facilitated by the Government which will finance the start up, use its authority to coerce people to get on to the data base and then hand it over to corporate interests when it reaches a steady state, what ever it may mean. Usha Ramanathan says that the UIDAI was set up by an executive notification dated January 20, 2009. The information collected for the unique identification project will be sold back to the Government through specially created, privatized, for-profit utilities, writes Ramanathan. This notion of private companies owning citizen’s data has not been discussed with state governments nor with the people from whom information is being collected.


It will be clear that the UIDAI has no legal backing what so ever and calls for court intervention to quash the whole scheme in toto. So it will be futile to go into the untold harassment it has caused the citizens in the enrollment, etc.. There was a report in the print media that an expenditure of more than Rs.. 40,000 crores has already been spent on this, and it will be hurtling towards the ideals set by the CWG scam followed by the 2G scam. One wishes that the CAG takes up the audit of the scheme and submits a report early so that the whole matter may be brought on to the public domain.


“…is duty bound to protect its citizens against misuse of power and arbitrary action by any institution. Authority without accountability will be draconian…” Is this a quotation from any scriptures? Or are these the noble and profound ideas of any famous philosopher or thinker? One wishes it were so! But, it is, I humbly place before the readers, the devil quoting the scriptures! In reality, it is the submission made by the submission before the Supreme Court in its petition, rejecting the CBI’s demand for complete autonomy!


Who however, will protect the citizens from the misuse of power and arbitrary action involved in the whole process of Aadhar card and its linkage with the bank account under the DBT scheme? Only the Court and / or the people can save the citizens.


by C. A. Balasubramanian, Additional Controller General of Accounts (Retd.), Government of India


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