LPG Cylinders : Subsidy, Aadhar
There are 14 crore LPG consumers in the country which comprises 60% of the population. LPG cylinder in India is subsidized. From Jan 1 2013 Government limited the number of subsidised cylinders to 9. Each consumer will have to buy LPG at market price and government will transfer the subsidy to his Aadhar linked bank account. If you want LPG subsidy then Aadhar is compulsory. This article explains about the number of subsidised LPG cylinders, why LPG cylinder is subsidised, how to link to Aadhar and more.
What is Capping of LPG cylinder?
From 14th September 2012, Govt. Of India (GOI) has capped supply of subsidised domestic cylinders to 6 cylinders in a year for all domestic consumers. This was modified to 9 cylinders on 18th January 2013.
How many subsidised cylinder I will get in current financial year 2013-14?
Consumer will get 9 subsidised cylinders in current financial year 2013-14. Number of Cylinders are counted from Apr 2013 to Mar 2014.
After I consume all capped quantity am I eligible for subsidised cylinder?
No subsidised cylinder will be delivered after consumption of capped quantity. However refill will be supplied on non-subsidised rate after consumption of capped quantity on receipt of refill order.
What will happen to my subsidised quota when I transfer my connection?
In case of transfer of connection on or after 14th September 2012, the balance available subsidised quota will be included in new distributorship. While obtaining transfer document from distributor kindly check print out of Balance Quota Available.
In case of new connection what will be the eligibility of subsidised quota?
Prorate quota (no fractional quantity) will be fixed basis the balance period of the financial year. It means if subsidy is 9 cylinders for 12 months from Apr and you have taken new connection in Jul then as 9 months are left the number of subsidised cylinders will be 9/12 * 9 = 6.75 which rounds off to 6.
How can I keep record of my consumption of cylinder?
At the time of delivery of refill cylinder kindly ensure recording of supply details by the delivery person in Domestic Gas Consumer Card (DGCC) book. If you do not possess DGCC book then kindly obtain it from your distributor on payment of its cost. Kindly get the existing DGCC book endorsed by the distributorship by visiting at showroom. Kindly check printed information of subsidised cylinder 1/9, 2/9 etc. upon refill cash memo.
How to get LPG Subsidy?
To get LPG subsidy you need to have following :
- Aadhaar number
- Bank account linked to Aadhar number
- Link the Bank account with Aadhar number with LPG Consumer Number.
The process of linking bank account number with Aadhar with LPG consumer is technically called as seeding of Aadhaar number. UIDAI has developed a Seeding platform termed the Remote Aadhaar Seeding Framework (RASF) which provides States with a utility to enable linking of Aadhaar numbers to beneficiary identities maintained by different schemes, For details one can read UIDAI’s RASF(pdf)
The Direct Cash Transfer (DCT) scheme aims to directly put the subsidy into consumers’ bank accounts. Once implemented, customers will have to purchase non-subsidized LPG cylinders at a uniform rate while the subsidy component will be transferred to their bank account annually. Details at
What is Aadhar?
Aadhaar , which means foundation, is a unique 12-digit Identification number issued to individuals for the purpose of establishing unique identification of every single person. It’s purpose is to eliminate the fake identities and documents from the government records.
- In Aadhar uniqueness is determined through the biometric (fingerprints, iris scan, photograph) and demographic (residential address) details of the individuals.
- Any resident of India including infants can enrol for Aadhaar. Even NRIs and foreign citizens residing in India can also enrol for Aadhaar.
- Aadhaar is not a card or a smart card rather it is a number which is unique for every beneficiary of it.
- No fee will be charged at any stage under this scheme
- Aadhaar number will remain valid for life.
- Aadhaar number will help you provide access to services like banking, mobile phone connections and other Govt and Non-Govt services in due course.
- The Unique Identification Authority of India (UIDAI) is the regulatory body on the behalf of government.
For more details one can read UIDAI’s FAQ on Aadhar.
Process of linking LPG with Aadhar
Two requirements for linking LPG with Aadhar
- Aadhaar number : Get an Aadhaar number if you don’t have one at Aadhaar enrollment centers
- Bank account : Open a bank account with Aadhaar number if they do not have one by going to a bank branch with Aadhaar number
Sample sheet is as follows :
What is the timeline for LPG subsidy ?
The process will be launched in 20 districts in the first phase which is by June 1 2013 and by October 15, it is expected to cover the entire country. The 20 districts are given below
|STATE NAME||DISTRICT NAME|
|Andhra Pradesh||Anantpur, Chittoor, East Godavari, Hyderabad, Ranga Reddy|
|Daman and Diu||Diu|
|Himachal Pradesh||Bilaspur, Hamirpur, Mandi, Una|
|Punjab||SBS Nagar / Nawanshahar|
|Madhya Pradesh||East Nimar (Khandwa),Harda|
How will LPG subsidy work?
- All LPG consumers would get an advance in their bank account as soon as they book the first subsidize cylinder even before delivery. This is to reduce their financial burden when they purchase the first LPG cylinder at market rate after launch of the scheme.
- As soon as, the first cylinder is delivered to such consumers, subsidy eligible on date of delivery will again get credited in the bank account, which will then be available for the purchase of the next cylinder at the market rate.
- The subsidy will be directly credited to their registered bank accounts through National Payment Corporation of India.
- This way government will transfer close to Rs 4,000 to every household annually to enable people to buy nine cylinders of LPG at the current market price.
Market price will differ every month depending on international crude oil price, which will be known on the first of every month. Market Price of cylinder(Indane) at various places in India can be found at Indane’s Tarrifs price webpage. Prices of other companies like HPGas, BharatGas will be similar.
Why Government is limiting LPG subsidy?
- The subsidy was introduced to help the poor raise their standard of living by offering cooking gas at lower rates. But it has proved ineffective as most of the rural poor don’t use LPG and it is the urban elite who benefit most from this. in 2007-08, only 8 to 9 % of rural people used LPG as main fuel for cooking as opposed to 62% in urban areas.
- The huge subsidy had opened it up for use as alternative fuel in other forms also. One such example is LPG cylinders being used in cars instead of petrol or diesel. Given LPG’s low price, it was a lucrative deal and people exploited it by having LPG conversion kits installed in their cars.
- Use of domestic cooking gas for commercial cooking purposes. Given the wide disparity in the rates of domestic and commercial cooking gas, it is siphoned away by hoteliers and dhaba wallas. The VIPs also have many cylinder connections in their name and use it excessively.
I do not want subsidised cylinder, is it possible?
Yes you can opt out from using subsidised cylinder by UnRegister Subsidy from HP GAS consumer world or by submission of application at distributorship. Afterwards your refill will be delivered at non subsidised rate.
What is subsidy?
A sum of money granted by the government or a public body to assist an industry or business so that the price of a commodity or service may remain low or competitive is called as subsidy. Derived from the Latin word subsidium, a subsidy literally implies coming to assistance from behind. Subsidies can be
- Direct such as cash grants, interest-free loans, reduced prices(ex of petrol). These are explicit and accounted separately in budget documents.
- Indirect such tax breaks, insurance, low-interest loans, depreciation write-offs(ex Air India), rent rebates usually in the form of a cash payment or tax reduction. These subsidies are implicit.
What does Indian Government subsidise?
The Indian government has ,since Independence, has subsidised many industries and products, from petrol to food. Of the overall subsidies, the subsidies on Petroleum, Fertilizer and Food make up more than 90%. Subsidy over the years is shown in picture below :
How is government trying to reduce the subsidy?
Government is trying to reduce various subsidies. The fertiliser and petroleum subsidy bill is largely dependent on the movement of global oil prices .
- The government has allowed oil marketing companies to set petrol prices in tune to the rise in oil prices globally.
- Diesel prices have also been decontrolled though in a phased manner (rise of 50 paise per month).
- The food subsidy has increased substantially in recent years on account of widening gap between the central issue price of wheat and rice and the economic cost of delivering these food grains.
- By disbursing subsidies through cash transfers as in case of LPG subsidy.
What is LPG subsidy?
Subsidized LPG is provided largely for domestic use(use in house), but institutional use is permitted for Government schools, hospitals, canteens, police stations, etc. Subsidized LPG cylinders are red in colour and contain 14.2kg of LPG, whereas commercial LPG cylinders are purple and contain 19kg of LPG.
Domestic Consumers are entitled to nine subsidised LPG cylinders. The government will send the cooking-gas subsidy directly to the bank accounts of subscribers as a part of extension of Direct Benefit Transfer(DBT). Annually, this would amount to about Rs 4,000 per year by the government to each household as a cash transfer
What is Direct Benefit Transfer program?
Direct cash transfer simply means transfer of cash directly to the beneficiaries’ accounts. The scheme was first announced in Budget 2011-12 and it was to be use to directly transfer the difference between the market price and subsidized price to the beneficiary in the form of cash.The programme was launched on 1st Jan 2013 across 20 districts in six states on a pilot basis. The scheme is rechristened as Direct Benefit Transfer. It will cover schemes like widow pension, educational scholarships for SCor STs, OBC and minorities, etc. . The government plans to disburse 3,200 billion rupees under the Direct Benefit Transfer (DBT) scheme.
The primary aim of this Direct Benefit Transfer program is to bring transparency and terminate pilferage from distribution of funds sponsored by Central Government of India, In DBT, benefit or subsidy will be directly transferred to the citizens living below poverty line. No subsidy will be given to those people who don’t require it. So it will reduce waste while ensuring welfare money reaches those who need it most.
How much is a LPG cylinder subsidised?
Domestic LPG is subsidised. Even though domestic LPG cost price is directly related to international prices, oil marketing companies were selling at the government decided issue price. Government was then compensating them for selling LPG below the cost price, called as under recovery. The huge subsidy, under recovery, burden led to capping of the LPG cylinders. Oil marketing companies incur a loss of more than Rs 350 on every cylinder they sell. The government spent Rs 30,000 crore on LPG subsidy in 2011-12.The Report of the Task Force on Direct Transfer of Subsidies on Kerosene, LPG and Fertiliser (pdf) provides some other interesting figures.
- The total subsidy to the consumer was Rs.76 per cylinder in FY02-03.
- The total subsidy to consumers in FY09-10 was Rs 16,071 crore, when the per cylinder subsidy was Rs 185.
- With the current international oil prices rising, the total subsidy to the consumers has steadily risen and now is around 350-400 Rs per cylinder.
The process of how LPG reaches the consumer, who all are involved and costs at every stage is shown in picture below :
From HP Gas Price Build-up of Domestic Subsidized LPG (14.2 Kg Cylinder) at Delhi(pdf).
What are LPG transparency portals ?
To capture the complete details of customers and track their LPG consumption pattern with an aim to increase transparency in LPG supply chain, Oil Marketing Companies have made which is called as a transparency portal which is hosted on their individual websites. These portals provide complete details of each customer with their consumer numbers, name, address, no. of cylinders supplied, dates of supply as well as the indicative subsidy amount for the cylinders supplied. The portal and information on portal is given below :
Links for the transparency portals are:
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Do you think LPG subsidy is a good idea? Should those who can afford also get LPG subsidy? Is the process of getting LPG subsidy by linking to Aadhar account makes sense? Will it work?