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MCD poll in mind, Delhi Govt plans Rs 40/cylinder subsidy to BPL families
June, 29th 2011

Delhi Chief Minister Sheila Dikshit has stolen a march on all her compatriots in executing a populist LPG policy. While the Delhi Government had withdrawn Value Added Tax (VAT) on LPG the last time prices were raised, on Monday the city Cabinet decided to subsidise the cost of LPG by Rs 40 per cylinder for the Below Poverty Line (BPL) and Antyodaya card holders.

According to public distribution system (PDS) records, nearly 5.25 lakh families would benefit from this scheme, while middle class families have been kept out of the ambit of relief. The LPG will be priced at Rs 355.35 per cylinder for families covered under BPL and Antyodaya schemes. However, consumers in the national Capital not in the BPL and Antyodaya scheme will have to shell out Rs 395.45 for an LPG cylinder after the hike.

The cost of diesel would be brought down by 37.5 paise per litre as the Government has decided to withdraw VAT on the increased prices. Diesel will now cost Rs 40.75 a litre in the national Capital. Delhi has become the fourth State after West Bengal, Haryana and Uttarakhand to announce reduction in prices of oil products.

Political experts say that the Delhi Government has taken the decision to provide subsidy to only 4.50 lakh families keeping in view coming MCD elections next year. The BPL and Antodaya card holders are traditional Congress voters in Delhi. The decision to provide subsidy to 4.50 lakh card holders means subsidy to 25 lakh voters who certainly will play a major role in the coming MCD election, said experts. It may be noted that after trifurcation of the MCD and 50 per cent seat quota for women in the MCD, the party high command has entrusted Sheila the task to win the MCD polls next year.

On the other hand, the Government claims that 25 lakh people would benefit from the subsidy on LPG, while the data available with the PDS department reveals that there are only 35,000 BPL card holders who have LPG connections. It would be wrong to say that the Government has kept the middle class and upper class families out of the ambit of relief. Most of the colonies inhabited by these people already have piped PNG gas connection, said a Government official.

After long deliberations in the Cabinet meeting, Chief Minister Sheila Dikshit said that the LPG cylinder will cost Rs 40 less for BPL and Antyodaya while diesel will cost 37.5 paise less per litre. She said the decision on LPG subsidy and cut in diesel prices will put a burden of around Rs 39 crore annually on the State exchequer. Asked about the minimal cut in diesel prices, she indicated that the Government wanted to keep room for providing relief in the event of further hike in prices of petroleum products in future.

Insiders say that the Finance Department had come up with a proposal to grant subsidy of Rs 20 on each LPG cylinder but this was rejected by the Chief Minister as the Government would have to pay Rs 500 crore as subsidy. There were differences in the Cabinet Ministers on the issue as two ministers reported to have favoured the proposal of finance department. On the other hand, Dikshit was of view that the Government should look into future and its financial position as there are talks that the prices will be further increased. The Delhi Cabinet has preferred to go ahead with the proposal to give subsidy to only BPL and Antodaya card holders as it needs only Rs 38 crore for the subsidy amount.

Under attack from all sides for raising the price of fuel, the Congress had on Saturday asked party-ruled States to reduce taxes on petroleum products to give a reprieve to the common man. West Bengal Chief Minister Mamata Banerjee announced withdrawal of sales tax on cooking gas to partially neutralise the impact of the price hike. The decision would reduce the price of a cylinder of LPG by Rs 16 in West Bengal. Haryana has also stepped in to reduce the impact of the latest hike in prices of cooking gas and diesel on the common man by announcing a waiver of the 5 per cent VAT on kerosene.

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