Govt’s PAHAL scheme hasn’t saved as much money as claimed, CAG says

Savings of one of the key schemes of Narendra Modi-led Government—PAHAL—may be less than what is being advertised, Comptroller and Auditor General of India (CAG) said in its report tabled in the Parliament on Friday.
 
The Government had claimed in February this year that the potential savings in Liquefied Petroleum Gas (LPG) subsidy for 2015-16 stood at Rs 9211 crore. Oil marketing companies estimated the savings for the same period at Rs 5,107.48 crore.
 
CAG said, “The methodologies adopted by the Ministry and the OMCs were different. In both estimations, however, Audit noticed inherent inconsistencies which would lower the estimated savings.”
 
It said, “Ministry of Petroleum and Natural Gas (MoPNG) assumed that the inactive or blocked consumers, who were not eligible for subsidy would have availed the entire quota of 12 cylinders against the national average per capita consumption of 6.27 cylinders in 2014-15. Considering the national average off take of 6.27 cylinders (as used by OMCs in their estimation), the estimated savings in subsidy for the year 2015-16 would be Rs 4,813 crore only.”
 
On November 2014, BJP government introduced Pratyaksh Hastantrit Labh Yojana (PAHAL) scheme, for transfer of subsidy on LPG directly to the consumers linking their Aadhaar Number, Bank account and LPG Consumer ID.
 
CAG further said, “IOCL (the coordinating agency of OMCs for LPG) considered the average subsidy rate in 2014-15 while working out the subsidy savings for 2015-16. This has led to an over-statement of savings in subsidy, in view of the sharp fall in prices in 2015-16 vis-à-vis 2014-15. If the average subsidy of  Rs169.45 per cylinder in 2015-16 was considered (as used Report No. 25 of 2016 vii by MoPNG in their estimation), and after considering the savings in subsidy due to opting ‘Give-it Up’ by 67.27 lakh consumers (as on 29 February 2016), the subsidy savings would reduce to Rs 3,473.48 crore, instead of Rs 5,107.48 crore estimated by the OMCs.”
 
It said, audit examination indicated that reduced subsidy rate on account of fall in crude oil price resulted in reduced subsidy payout of Rs 21,552.28 crore, while the effect on the same due to reduced offtake of cylinders by consumers worked out to `1,763.93 crore. Therefore, it is evident that the lower subsidy rates in 2015-16 is, by far, the most significant factor resulted in subsidy savings.