No more LPG subsidy if you earn above 10 lakh a year

There will be no subsidy on cooking gas cylinders if the registered consumer or his/her spouse has an annual taxable income of more han Rs 10 lakh,the oil ministry announced on Monday .

The income cap will come nto effect from next month.To begin with, the new criteria will be applied on the basis of self-declaration at the time of booking an LPG refill in keeping with the “government’s approach of trusting citizens“.

The reasoning draws from the success of PM Narendra Modi’s `Give it Up’ campaign, which encourages economically well-off consumers to voluntarily surrender the LPG subsidy so that clean fuel can be provided to those who are still dependent on firewood or cowdung cake for cooking.

Limit To Come Into Effect From January

Each registered household is entitled to 12 subsidised cylinders in a year. The ministry’s move will ensure that consumers who fall in the 30% income-tax bracket lose their subsidy , once the criteria are implemented fully by linking the PAN number to the consumer number.

Though the number of such LPG consumers is not immediately known, the scheme is expected to free up a substantial chunk of subsidy for the poor. But it may also raise the hackles of several middle-class voters.LPG Subsidy

The move indicates the Modi government’s resolve to tackle the issue of kitchen subsidy , long a holy cow of Indian politics. Governments have toyed with various plans in the past but floundered under political pressure. Governments have toyed with various ideas to tackle LPG subsidy but have floundered under political pulls and pressures. The Modi government’s move to end the subsidy for all those earning above Rs 10 lakh marks the first time that a concrete step has been taken.

The United Front government in 1997 unveiled a comprehensive oil reforms package with timelines for deregulating fuel prices and remov ing subsidies. Carrying forward that decision, the ministry under Ram Naik during the NDA-I rule decided in 2002 to first freeze -and then gradually phase out -LPG subsidy by raising rates in small measures. But this plan was dumped as polls neared and oil prices spiked.

During the UPA-II regime, the ministry under S Jaipal Reddy proposed to deny the benefit to the economically well-off as part of an overall plan to prune LPG subsidy , first reported by TOI on July 9, 2011. Broadly , households with a car, house or two-wheelers were to have lost subsidy . But the plan did not move beyond the drawing board due to opposition in the Congress and from its allies.

As TOI had first reported on No vember 7, oil minister Dharmendra Pradhan had last month given an indication that the government was looking at stripping the rich of subsidy with the aim of ensuring more responsible use of public money.

“I humbly submit that the time has come for the government, the finance ministry can determine, that people in a particular income bracket should not be given the subsidy… The question as to who should get subsidy should be debated.Subsidy should not be given to people in a particular income bracket,“ Pradhan had told the fi nance ministry’s Delhi Economics Conclave on November 6.

The oil minister was reacting to a question from finance minister Arun Jaitley, who asked whether one could move beyond the JAM (Jan Dhan-Aadhaar-Mobile) programme aimed at better targeting of subsidies and compulsorily deny the subsidy to people within a particular income bracket.

Nearly a year ago, Jaitley had told a media event in Delhi that “the next important decision India will have to take is whether people like me… (are) entitled to get our LPG subsidy . I think the sooner we are able to take these decisions as to who is entitled to these subsidies -of course some people would be -the better it would be for our system.These decisions are all on our agenda.“

Source: Times of India 29 Dec’2015