 "Canadian agency calls govt's DBTL savings figure a \"large overestimate\"")
Canada-based International Institute for Sustainable Development (IISD) has called government's estimate of fiscal savings of Rs 12,700 crore due to Direct Benefits Transfer for LPG (DBTL) a "large overestimate".
The IISD comment cites a media report quoting Chief Economic Advisor Arvind Subramanian as saying that in June savings of Rs 12,700 crore are estimated from DBT in LPG based on sales and subsidy levels for 2014-15.
Prime Minister Narendra Modi in his 15 August address had said that India saved Rs 15,000 crore of LPG subsidy outgo through DBTL.
But the independent research organisationd, in its latest commentary on India’s DBTL program, said the fiscal savings attributable to DBTL last financial year were only Rs 143 crore and not Rs 12,700 crore as claimed by the government.
“The government has not so far provided calculations regarding either its claimed savings from DBTL in 2014-15 or projected savings for 2015-16. The much-publicised fiscal savings figure of Rs 12,700 crore, in particular, deserves scrutiny: based on an analysis of publically available data, this figure seems to be a large overestimate,” the commentary authored by Kieran Clarke, Shruti Sharma and Damon Vis-Dunbar of IISD said.
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The oil ministry did not respond to a detailed questionnaire by Business Standard seeking comments.
The report says households were given three months from the initial introduction of the scheme in their district to register bank account details for direct payment, during which time they were still able to purchase subsidised cylinders within their quota. Following this period, households could only purchase non-subsidised domestic cylinders. For a further period of three months, the equivalent per cylinder subsidy would be recorded and released to the consumer upon DBTL registration.
“For seven-and-a-half months from April 1, 2014 until November 15, 2014, the scheme had no direct effect on total subsidy expenditure. DBTL only began to formally restrict access to subsidised LPG for non DBTL-registered households in mid-February 2015, and then only in the 54 districts selected in Phase 1 (representing 8% of total districts). In the remaining Phase 2 districts (constituting 92% of total districts), non-registered households retained formal access to directly subsidised LPG until March 31, 2015,” IISD has said.
The study states assuming programme implementation on the basis formally announced, the theoretical maximum reduction in subsidy expenditure directly attributable to DBTL in FY14-15 can be roughly calculated by applying the initial reduction in subsidised consumption (reported as 25%) to the total potential consumption available to existing connections (reported as 23.3 million), then applying the relevant data on monthly under-recoveries and fiscal subsidy to calculate the estimated ‘avoided’ expenditure.
IISD calculated the savings by multiplying the per cylinder subsidy in the months of February and March 2015 with the number of connections restricted by DBTL (5.8 million) in the 54 districts. For February, the savings figure was reduced to half as restriction began on 15 February. The current government had reintroduced DBTL in 54 districts in mid-November 2014, with nationwide roll out to all districts from January 2015. Since April 1 this year, India’s cooking gas subsidies are being distributed solely by electronic transfer through DBTL.
