Government, oil firms inflated PAHAL subsidy savings: CAG

The Comptroller and Auditor General of India (CAG) on Friday said in a report that the government and the oil marketing companies had overstated savings on subsidy due to implementation of direct benefits transfer on liquid petroleum gas (LPG), or the PAHAL scheme. The CAG claimed that 92 per cent of the Rs 23,316.21 crore the government saved in subsidy payout in 2015-16 occurred due to a drop in crude oil

prices. According to the auditor, the savings from the fall in crude oil prices were Rs 21,552.28 crore, while the savings from the reduced offtake of subsidised cylinders through schemes like PAHAL were Rs 1,763.93 crore for the first three quarters of 2015-16. "This comes at a time when the government estimates savings from PAHAL at Rs 9,211 crore, while oil marketing companies estimate them to be Rs 5,107.48 crore in 2015-16," a CAG official said.

The actual subsidy payout during April-December 2015 was Rs 12,084.24 crore against Rs 35,400.46 crore during the same period in 2014. The report stated that there was a significant reduction of Rs 23,316.21 crore in the LPG subsidy payout due to a combined effect of a decrease in offtake of subsidised cylinders by consumers and lower subsidy rates arising from the sharp fall in crude oil prices during the first three quarters of 2015-16.

The auditor also highlighted that it had noticed inconsistencies in the estimates of the government (Rs 9,211 crore) and oil marketing companies (Rs 5,107 crore). The difference came about because the ministry of petroleum and natural gas assumed that the blocked consumers who were not eligible for subsidy would have availed their entire quota of 12 cylinders against the national average per capita of 6.27 cylinders in 2014-15.

"Considering the national average offtake of 6.27 cylinders, the estimated savings in subsidy for the year 2015-16 would be Rs 4,813 crore," the report said.

Indian Oil Corporation, co-ordinating agency of oil marketing companies for LPG, considered the average subsidy rate in 2014-15 while working out the savings for 2015-16. While the average subsidy for 2015-16 was Rs 169.45 per cylinder, the average subsidy in 2014-15 was Rs 338 per cylinder.

According to the auditor, based on an average of Rs 169.45 per cylinder, and after considering the savings due to the #GiveItUp scheme in which 6.72 million consumers gave up their subsidy voluntarily, the savings would reduce to Rs 3,473 crore instead of Rs 5,107.48 crore estimated by the oil marketing companies.

Bharat Petroleum Corporation Ltd (BPCL) agreed with the findings of the audit and Hindustan Petroleum Corporation Ltd (HPCL) did not offer a specific response on the issue. IOC forwarded a reply on behalf of the oil marketing companies to the ministry on a parliamentary question on savings on LPG subsidy that at an average of Rs 156.48 per cylinder in 2015-16, the savings would be Rs 9,144 crore.

PAHAL was expected to weed out fake connections, address concerns over diversion of LPG cylinders for commercial use, decrease the subsidy outgo and generate savings for the government. The scheme was launched in November 2014 in 54 districts and was subsequently extended to the country's remaining 622 districts on January 2015.

Responding to a question on overstatement of the subsidy savings, a petroleum ministry official said, "Had we not implemented schemes like PAHAL, a higher savings on subsidy would not have been possible."

OTHER CAG REPORTS

Highlighting inconsistency in the govt data, the CAG on Friday suggested the Centre take steps to ensure the Fiscal Responsibility and Management Act disclosure statements are transparent and complete in all respects

The CAG pulled up the revenue department for failure to take stringent action against assessees who took advantage of the immunity provisions under the service tax compliance scheme and again became non-filers

The CAG in its report on Union Territories pointed to irregularities in accounts and poor financial management resulting in loss of crores of rupees

Source: PTI

READ MORE ON

PAHAL

CAG

OIL FIRMS

LIQUID PETROLEUM GAS

LPG SUBSIDY

INDIAN OIL CORPORATION.BHARAT PETROLEUM CORPORATION

HINDUSTAN PETROLEUM CORPORATION

ECONOMY & POLICY

NEWS