PAN card holders (income-tax payers) may be in for a shock if this proposal manages to pass the political muster. Consumers of cooking gas, liquefied petroleum gas (LPG), may have to fork out more.
The government plans to withdraw subsidies for taxpayers, which will hike cooking gas prices to almost Rs 480 a cylinder. The Cabinet is expected to discuss shortly a proposal to make all taxpayers holding PAN cards pay an extra Rs 180 per cylinder.
It is proposed that LPG would now be sold through a smart card bearing PAN. PAN will be made an essential part of the proposed LPG smart card so that, in future, income-tax payers could pay the actual cost of LPG, an official said.
The proposal has been raised at a committee of secretaries (CoS) constituted for implementing the recommendations of the expert committee on integrated energy policy. The CoS is headed by the cabinet secretary. However, changes in retail prices of fuel, particularly cooking fuel, have always been a politically-sensitive issue, since it impacts the vote bank. LPG prices were last raised in April 2005.
The move is aimed at reducing the governments subsidy burden, an official said. Currently, the price of an LPG cylinder is subsidised by both the government (Rs 22.50/cylinder) and public sector oil marketing companies (Rs 190/cylinder). Consequently, consumers have a cushion of around Rs 212.50 per cylinder.
The subsidy for cooking fuel is uniformly enjoyed by all consumers irrespective of their economic status. The government has been working on strategies to limit subsidies only for targetted consumers like families below the poverty line.
PSU oil companies like IOC, HPCL and BPCL are incurring major losses due to the heavy subsidy burden on LPG and kerosene. In 2004-05, total under-recoveries by these PSUs on sale of domestic LPG was about Rs 17,842 crore, which jumped to Rs 28,584 crore in 2006-07.
According to a source, the petroleum ministry has informed the secretaries panel that a pilot project for introducing smart card for all LPG users is under implementation.
As per the expert committee report, a system of debit cards or smart cards may be introduced, whereby the targeted households get a credit of different amounts of cash for the purchase of these entitlements. The available credit on the debit/smart card can only be used for purchasing these entitlements. Card readers operated on battery and feeding data using mobile technology can work in rural areas of the country too.