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By Mathew Thomas June 5, 2013




The ‘Direct Benefit Transfer’ (DBT) scheme for depositing subsidies for domestic LPG consumers has been launched with fanfare and trumpets.

Media carried photos of the smiling faces of the Karnataka chief minister, the Union minister for petroleum and the chairperson of UIDAI at the launch in Tumkur. Newspapers carried half-page advertisements of the launch with exhortations asking people to enrol for ‘Aadhaar’/UID in order to receive LPG subsidies.

The launch reminded me of Charles MacKay’s book, ‘Extraordinary popular delusions and the madness of crowds.’ Mackay says, “The follies of mankind are not unique to the modern age”. They are not unique to ‘Unique ID’ either. Apart from the delusions that Mackay described in his book, the world has witnessed the results of many popular delusions. The delusional fervour that pushed America over the financial cliff into the depression of the ’30s, the ‘Dot-com’ bust of the ’90s and the meltdown of 2007-2008 are examples.

Is the DBT scheme driven by some such extraordinary popular (or perhaps unpopular) delusion? It would appear so. Alternatively, it could be legerdemain. The latter appears more likely. The ‘madness of crowds’ could be sensed in the queues that line up for enrolment in UID fearing loss of LPG subsidy. The prophecy of the UIDAI chief that the ‘voluntary’ UID, “would become ubiquitous” and “service-providers may ask for it” is being fulfilled right before our eyes. Voluntariness of UID has become a cruel joke.
The government / UIDAI justifies or rationalises DBT using Aadhaar numbers linked to bank accounts  saying that crediting subsidies into bank accounts of domestic LPG consumers would prevent leakages of subsidies. This again, is an assumption without any ‘aadhaar’ (foundation).

Subsidy leakages of the order of Rs 12,000 crore are sometimes bandied about, though no one has said how the figure was arrived at and why no action has been taken so far, if such large-scale abuse is a fact. Significantly, the minister for petroleum made no mention of Aadhaar in his speech at the launch of the LPG portal, but said, “the need to curb unauthorised use of LPG for commercial purposes has become acute.” The LPG portal creates transparency, which would prevent unauthorised use of LPG. If so, what is the purpose of DBT?

Did they call it ‘Direct Benefit?’ – trust the inventors of brand names for welfare schemes, to come up with this alluring phrase. A look at the process of a domestic consumer’s ordering a LPG cylinder and its delivery would show that DBT is a sham. Until recently, the consumer called the distributor on the phone or went to the distributor’s premises and placed the order for the cylinder. The cylinder is then delivered at the house of the consumer.

Apart from home-delivery to prevent misuse of domestic LPG, further controls had been introduced several years ago. Thus, a consumer cannot order a refill within 21 days of receipt of the previous cylinder. Recently, a passbook scheme and IVR booking of refills have been installed as added control measures. LPG subsides cannot be easily siphoned off in money. Subsidised LPG cylinders could be used for purposes other than domestic.  To siphon LPG subsidy, the LPG cylinder would have to be supplied to an ineligible (non-domestic) customer who would then pay the subsidy amount to the eligible customer in whose name the connection exists and the subsidies pocketed/shared. This is highly improbable and easily detectable.

Alternatively, consumers could themselves use domestic LPG cylinders for commercial purposes. The misuse could be done whether the subsidy is credited to the consumers’ bank account or not. Therefore crediting subsidies into bank accounts of consumers to prevent subsidy leakages does not make sense. Surely, the advocates of DBT would know this. Subsidies could be credited to bank accounts by merely linking the accounts to LPG customer numbers. Why are UID numbers required for DBT? Is the truth being deliberately twisted to promote UID/Aadhaar claiming that it is required to implement DBT for LPG subsidy transfer? This is quite possible, nay probable.

There are about 130 million domestic LPG consumers. LPG subsidies are about Rs 43,000 crore per annum. Subsidy on each cylinder is Rs 320. About 32 lakh cylinders are delivered daily to consumers. A subsidy leakage of Rs 12,000 crore translates to misuse of 375 million cylinders per annum. This is clearly impossible. Have either the government or the oil companies or UIDAI done any investigation into leakage of LPG subsidies? If so, they should make the details public. If no such investigation has been done, then the claims justifying DBT for LPG subsidies by linking UID numbers to LPG customer bank accounts to prevent subsidy leakages is plain hogwash.

The average consumption per household by a genuine domestic LPG consumer with a family of four people (two adults and two children) would be about a cylinder in a month and a half. The oil companies have a database of consumers and the LPG cylinders they consume. A study of the consumption pattern would quite easily reveal any misuse of the cylinders. In what way would any other database with either the electric meter numbers or the UID numbers be superior to the consumer numbers, is a question that has not been answered by the government or oil companies or UIDAI. It’s high time government stops spending public money on phantom programmes based on someone’s whims and fancies.