Govt eyes ending schemes, including PAHAL, with wasteful expenditures

The PAHAL scheme, launched in 2013, is aimed at reduce diversion and eliminate duplicate or bogus LPG connections

As part of a larger initiative to cut inefficiencies and wasteful expenditure, the Centre is taking a hard look at schemes, which it feels can no longer serve their purpose. One of them that could be abolished is the PAHAL scheme, Business Standard has learnt.

The scheme, launched in 2013, aims to reduce diversion and eliminate duplicate or bogus LPG connections. Under this scheme, LPG cylinders are sold at market rates and entitled consumers get the subsidy directly into their bank accounts from oil marketing companies (OMCs).

“The idea was for customers to voluntarily give up their subsidies, since PAHAL does target the poor but not below-poverty-line (BPL) families. That has not happened. So, there are discussions on whether to phase out the scheme or not,” a senior government official said.

A second official confirmed the development and said that PAHAL is one of the schemes being examined. “The amount is relatively small, but it is part of rationalisation of overall revenue expenditure items,” the second official said.

According to the FY23 Union Budget documents, the allocation for PAHAL is Rs 800 crore. This is down from FY22’s revised estimates of Rs 1,618 crore.

However, the overall LPG subsidy budget is Rs 5,812 crore. This includes free gas cylinders distributed to women living below the poverty line under the Pradhan Mantri Ujjwala Yojana.

The move comes at a time when OMCs are facing a substantial under-recovery burden due to selling of petroleum products at subsidised rates. There is also pressure on the fiscal deficit target of 6.4 per cent of GDP. It is due to increased food and fertiliser subsidies and cuts in excise duties.

However, healthy goods and services tax (GST) collections and windfall tax are a cause for optimism.

The finance ministry had asked various line ministries and entities responsible for implementing subsidy and welfare schemes to cut wasteful expenditure.

On food subsidy, Food Corporation of India (FCI) and the food and public distribution department have been asked to weed out inefficiencies up and down the value chain.

While procurement and issue costs won’t be touched, the relevant departments have been asked to examine if inefficiencies can be identified and removed in storage, logistics, transportation and demurrage charges.

Similarly, in flagship schemes like MGNREGA and PM Kisan, the relevant ministries have been told to speed up identifying ghost beneficiaries and fake accounts, among others.

Of particular concern to central policymakers is the fact that the number of MGNREGA beneficiaries was around 50 million before Covid. It rose to around 70 million as the economy slumped, but has not come down to pre-pandemic levels.

The finance ministry also plans to cross-check income taxpayer data with data of welfare scheme beneficiaries such as PM Kisan. Such weeding out of bogus accounts and ghost beneficiaries will involve cooperation from state governments as well, officials said.

The Centre has already issued a set of advisories for states to weed out ineligible farmers from the PM-KISAN scheme. Most of these are cases having one or more family members as taxpayers.

Prudent Move
 

• Move part of a larger initiative to cut wasteful spending and inefficiencies

• Officials believe PAHAL has not served its intended purpose

• Scheme was voluntary, beneficiaries not giving up subsidy

• Ujjwala, for BPL families, will not be touched