Pranav Nambiar P Thursday, May 30, 2013 , FE
New Delhi : In the 20 districts selected for the first phase of the direct benefit transfer (DBT) scheme roll-out starting June 1, not even one out of five households is in a position to benefit from the scheme right now, an FE investigation shows. In these 20 districts — deemed to be the most Aadhaar-ready — with an estimated 76 lakh households, only 56% have their LPG connections linked to an Aadhaar number. And hardly a third of these households with Aadhaar-linked LPG accounts have bank accounts seeded with Aadhaar cards. Considering that such a dismal situation persists even in these districts selected for the initial phase of DBT roll-out primarily on the basis of their high Aadhaar penetration (80%), it is clear that the scheme’s expansion to the more unprepared and less accessible parts of the country is easier said than done.
The country has a total of 14 crore households with LPG connections, going by the records of oil marketing companies. The government’s hope is that pan-India roll-out of DBT for LPG subsidy disbursal would help trim its subsidy burden on this fuel by an annual R10,000 crore. The DBT scheme, meant to to cover the government’s annual bills on subsidy and entitlements like pension and scholarships by cutting leakages, is expected to come handy for the fiscal consolidation drive.
Government officials in the know told FE for every 100 households on an average in these 20 districts, some 80 have an Aadhaar card, of which around 56 have LPG connections seeded to their Aadhaar card and just 19 bank accounts seeded with Aadhaar cards. Owing to these low levels of linkage, a grace period of three months has been given to people in these districts to link Aadhaar cards with both LPG and bank accounts. During this period, they would continue to get the entitled number of LPG cylinders at subsidised prices.
This effectively means a deferment of the DBT roll-out. After this grace period, all customers who have not completed the necessary formalities will have to buy LPG cylinders at market price (that is, sans any subsidy), till they complete the same and be able to access DBT benefit.
Among the 20 districts covered under the first phase of DBT, two – Mysore in Karnataka and Mandi in Himachal – will start the scheme out from July 1, due to bye-elections. Of the remaining 18, those with the lowest bank linkages include SBS Nagar in Punjab, Diu in Daman and Diu as well as Una in Himachal Pradesh, which has less than 10% Aadhaar linkages to bank accounts. LPG linkages in these regions are higher at around 40-50%.
On the other hand, some districts like Mysore in Karnataka, Pathanamthitta in Kerala, and East Goa in Goa have about 30-40% of bank accounts linked to Aadhaar. LPG linkages to Aadhaar cards are also relatively higher in these districts ranging between 50-75%.
Under the DBT scheme, LPG consumers will get about Rs 4,500 per annum in cash from the government in their bank accounts as subsidy. They will have to buy LPG cylinders at the market price of Rs 901.50 (per 14.2-kg). The supply of subsidised LPG cylinder has been capped at nine cylinders per year for a consumer.
Banks have also been somewhat tardy in reaching out to the intended beneficiaries as they expect individuals to take up the onus in getting bank accounts and LPG connections seeded with Aadhaar, an official added. “Nevertheless,we have now launched extensive awareness campaigns across different formats like print, television and radio. We are also distributing pamphlets about the benefits of the programme and have kept drop boxes at LPG distributors for submitting bank account details,” the official said. He added that some people, particularly sections of the upper middle class and high net worth individuals might even be showing lack of interest in availing themselves of the DBT benefit.
A government official from Tumkur district in Karnataka said the reason for the low bank account linkages is that some people are worried about sharing bank account details in case it might be misused. In Tumkur, out of a targeted 3.20 lakh households, only about 18% bank accounts and 55% LPG connections are linked to Aadhaar.
An official in Maharashtra’s Wardha district said in many cases, people do not have bank accounts. This has slowed down the process of linking bank accounts with Aadhaar cards. Out of 2.01 lakh households, 66% have LPG and 38% bank accounts seeded to Aadhaar.
An official in Kerala’s Wayanad district said there has been a slight improvement in the seeding levels as the June 1 kick-off date approaches. They are hoping the three-month moratorium along with enhanced SMS and call centre campaigns will push a much larger number of people to join the scheme. Out of the 1.4 lakh households in Wayanad, around 95,000 have LPG linkages to Aadhaar and 35,000 bank linkages with Aadhaar.
The government has not finalised the dates for the subsequent phases of rolling out the LPG DBT scheme to other districts. “We will watch and learn from these 20 districts before finalisng our next phase,” said a government official close to the development. At present, there are about 145 million LPG connections in the country.
To avail of the subsidy, customers without a bank account must open an account by submitting Aadhaar details to the bank branch or LPG distributors. Similarly, customers can link their LPG connections to Aadhaar cards by submitting details to the LPG distributors. As per the DBT scheme, Aadhaar-linked domestic LPG consumers will get an advance in their bank accounts as soon as they book the first subsidised cylinder even before delivery.
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