India’s LPG market scenario:
Indian
government provide subsidy for domestic cooking LPG gas connection. Currently,
subsidy is given to all citizens across income group. In a year, each domestic
LPG connection is entitled to get 12 subsidized cylinders of 14.2kg each or 34
refills of 5kg cylinders.
As per
government estimates, India has about 16cr domestic LPG connections. To provide
subsidized cooking gas, Government’s subsidy bill for LPG is at ₹22,000cr for
2015.
However as
compared with 71% urban households, in rural area only 21% households have LPG
connection. Which means out of about 8cr urban households 5.6cr uses LPG while
only 3.4cr out of 16.8cr rural household have LPG connection.
The
imbalance is striking and alarming and more importantly, majority of LPG
subsidy is given in urban area while needy rural households receives minor
share of subsidy benefits. Also, more than 13cr households in Rural India yet
to have an access to cleaner cooking fuel such as LPG.
For the
government, situation is tricky as LPG subsidy bill is mounting and due to lack
of LPG subsidy rationalization, it has fewer resources to increase rural LPG
penetration.
#GiveItUp Campaign:
GiveItUp
initiative by government which started by Prime Minister Narendra Modi is
slowly changing the situation. Since March 2015 when #GiveItUp started, almost
2 million people had voluntarily given up their LPG subsidy. The target of
government for #GiveItUp is 1 core connections.
Currently,
difference between subsidized and non-subsidized cylinder is about ₹180 - ₹200
per cylinder. Assuming, each household consumes all 12 subsidized cylinders,
annual subsidy per connection is ₹2,200 to ₹2,400.
In a country
where removing subsidy could be most anti-popular step, #GiveItUp is certainly
positive and courageous step by Indian Government in the right direction.
Who should #GiveItUp:
For any family
with good financial condition, annual subsidy of ₹2,500 given of LPG use is
insignificant, especially for people living in bigger cities.
Typically,
one time restaurant dinner bill for 4-5 people is ₹3,000 in any of metro
cities. Branded Denim Jeans costs about ₹2,500 to ₹5,000. Internet broadband
connection is anywhere between ₹600 to ₹1,200 per month (i.e. more than ₹7,500
annually). We can discuss many example like this which will emphasize the point
that
“People who can afford should “#GiveItUp”
However for any poor family with limited income, ₹2,500 is
significant amount which they get in the form of LPG subsidy.
If we want to be part of Developed nation then we have to
behave like citizens of Developed nation and understand the fact that for stronger
nation resource allocation should be efficient, effective and practical.
Subsidy
rationalization is necessary step for our nation to make long term sustainable
economic progress. #GiveItUp campaign for voluntary action to forgo subsidy
benefits by economically capable class should first step.
Also, state
governments must also be included in #GiveItUp initiative by providing
incentive such as “proportion of subsidy savings” in case they help in defined
manner.
However,
government must take steps to “Take Away” subsidy benefits by setting up some
criteria for various segments in the society. Such as
1.
Government Officials:
High ranked government official must #GiveItUp. They should not get further
promotions or increment in case they want subsidy. As subsidy is for poorer!
2.
MPs, MLAs:
Elected public representatives such as MPs and MLAs should not be given
LPG subsidy as they get sufficient facilities and perks from the Government.
Also, they are expected to lead by example!
3. Government Contractors:
If anybody want Government Contract above certain limit / size then they
must #GiveItUp first. Till you #GiveItUp, you are not allowed to bid. Also, PSU
oil marketing companies must convey fuel pump owners and dealers to #GiveItUp.
4.
Government Employees in PSUs:
High earning government employees should #GiveItUp. As government have
readily available data of these people, subsidy elimination process could be
quick and effective.
5.
High earning employees in Private
Sector:
Government should approach all private companies and take
away LPG subsidy of high earning employees by setting up limit such as ₹10 lacs
per year
6.
Frequent Air travelers:
People who travel by air frequently and spend more than ₹1 lac annually
on air tickets must #GiveItUp compulsorily.
7. Luxury Car owners:
People who owned luxury cars costing more than ₹15 lacs must not be given
LPG subsidy. For new buyer, you cannot buy Luxury car till you #GiveItUp!
Many more
such filters can be placed so as to “Take Away” subsidy from people who do not
need it and “Give Away” to those who really need it!
#GiveItUp is
good beginning not just for subsidy rationalization but to change the mind set
of entire country where “Joy of Giving”
can become culture and habit.
Good article bro....
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