The largest farmers’ cooperative IFFCO’s MD Dr U S Awasthi has welcomed the launch of Direct Benefit Transfer (DBT) for kerosene subsidy, where the users will buy the cooking fuel at the market rate but will get financial support directly in their bank accounts.
The government is set to roll this out starting April 1 this year. Hailing the decision Awasthi tweeted” Direct Benefit Transfer #DBT in #LPG, #Kerosene & in #Fertilisers will certainly help countrymen. Should be in #Fertilisers too 4 #farmers.”
In the next tweet MD says “#IFFCO welcomes launch of Direct Benefit Transfer (DBT) 4 Kerosene #subsidy from 1stApril by #GoI. Now, it’s turn for #DBT in #Fertilisers.”
The success of the PAHAL scheme in cooking gas gives an indication of the potential for use of Direct Benefit Transfer (DBT) to ensure genuine beneficiaries get the benefit of subsidy while preventing illegal diversion, an official release said.
Money spent on kerosene subsidy for the financial year 2014-15 was about Rs. 24,799 crore.
Several State Governments have come forward to implement DBT in kerosene in selected districts. Where such transfer is introduced, the consumer will pay the un-subsidised price of kerosene at the time of purchase.
Subsequently, the amount of subsidy will be directly transferred to the bank account of the beneficiary. To avoid any inconvenience to the beneficiary through payment of un-subsidised price, subsidy shall be credited to eligible beneficiaries in advance during the initial purchase.
With a view to incentivizing States/UTs to implement DBT in kerosene, it has been decided that the states be given cash incentive of 75% of subsidy savings during the first two years, 50% in the third year and 25% in the fourth year. In case, the states voluntarily agree to undertake cuts in kerosene allocation, beyond the savings due to DBT, a similar incentive will be given to those states/uts.
The calculation will be based on net savings in kerosene consumption at state level from the baseline. The baseline for calculation of savings shall be 90% of the 2015-16 allocation.
While implementing DBT, States have been advised to take all necessary steps to ensure eligible/genuine beneficiaries particularly in rural areas are able to access their full entitlement of kerosene. Special care should be taken in areas having irregular power supply.
The scheme will be implemented with effect from April 1, 2016. The state governments will be consulted before operationalizing the scheme. The working of the scheme will also be reviewed after three months of implementation.