Union Government to roll out LPG-like DBT scheme for kerosene from 1 April 2016


Who: LPG-like DBT scheme for kerosene
What: To be rolled out by Union Government
When: From 1 April 2016

The Union Government on 1 January 2015 decided to rollout a LPG-like direct benefit transfer (DBT) scheme for kerosene. The scheme will be started from 1 April 2016.

In the initial phase, the scheme will be implemented in selected 26 districts of eight states: Chhattisgarh, Haryana, Himachal Pradesh,Jharkhand, Madhya Pradesh, Maharashtra, Punjab and Rajasthan.

Key Highlights of the scheme

Under the scheme, people will buy kerosene at market rate, but will get subsidy directly in their bank accounts.

The cash subsidy to be paid to users will be equivalent to the difference between current Public Distribution System (PDS) price and market rate of kerosene.

To avoid any inconvenience to the beneficiary through payment of un-subsidised price, subsidy will be credited to eligible beneficiaries in advance during the initial purchase.

With a view to incentivise States and Union Territories to implement DBT in kerosene, it has been decided that the states will be given cash incentive of 75 percent of subsidy savings during the first two years, 50 percent in the third year and 25 percent 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.

The move will help curtail subsidy outgo for kerosene, which in 2014-15 was about 24799 crore rupees.