Wednesday, January 1, 2014

Direct transfer of Cash subsidy on kerosene to be launched soon

BL01_SPEECH_KEROSEN_490521e

The government of India puts a way ahead tolaunched  Cash subsidy on kerosene after the successful implementation of cash subsidy on LPG  for BPL (below poverty line) families.
The scheme would be known as DTCK (direct transfer of cash subsidy on PDS kerosene). This would be on the lines of DBTL( direct benefit transfer of subsidy on LPG (cooking gas).
The mode of implementation would be covered under two phases , In the first phase seven districts of three states would be covered under the subsidy.
In Maharashtra  , the scheme would be lunched in Nandurbar , Wardha and Amrawati . while in Rajasthan , Alwar , Ajmer and Udaipur would be covered.  Similarly, the initiative would be covered in north Goa.
So far , Centre had grant a subsidy of around 1700 crore rupees for DBTL , but now the exchequer would be expected to face a subsidy bill of 30000 crore rupees for providing fuel to BPL families.
A pilot DTCK scheme has been running in Kotkasim tehsil of Rajasthan’s Alwar district since December 2011. The results have been encouraging.
What is direct transfer of cash subsidy : 
The price of the commodity remain same as that of the market price , government  itself decide the subsidized price and pay the difference between market price and subsidized price directly to the family of the BPL in their  account.
Instead of paying subsidy to the manufacturer , government directly pay cash to the poor people.
The change in the subsidy policy able to tackle the following shortcomings of the system :
• Dual – pricing
• Black Marketing
• Unresponsiveness to customer needs
• Poor targeting of BPL population
• Diversion and leakages
• Under recoveries for Oil Manufacturing companies ( OMCs) .
Bolsa Família Program (BFP):
The largest and the most successful conditional cash transfer program is the Bolsa Família Program (BFP) in Brazil that covered close to 100 percent of Brazil’s poor in 2007.
Under the programme, the government transfers cash straight to a family subject to conditions such as school attendance, nutritional monitoring, pre-natal and post-natal tests. The entire system is managed through efficient targeting, disbursement and regular monitoring of the disbursed funds.

Impact on government

• The new system is expected to reduce this cost and subsidy bill through better targeting
• In the Union Budget 2012-13, target is to keep 2012-13 subsidies under 2 percent of GDP and under 1.75 percent of GDP in the next 3 years .

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