Direct cash transfers to cut LPG subsidy by 25%: FM Arun Jaitley

NEW DELHI: Finance minister Arun Jaitley on Sunday said the direct transfer of cooking gas subsidies into the bank accounts of users will help the government cut its subsidy bill by around Rs 12,700 crore, or around a quarter of the funds spent last year.

The minister used the successful transition to direct benefit transfer (DBT) system to argue for extending the scheme to other subsidies, something that has been debated for long but had seen minimal progress.

"The experience with the DBT scheme in LPG is very encouraging. Research by the office of the chief economic adviser shows that about Rs 12,700 crore (25%) will be saved this year from the DBT scheme. If we can be careful in our design and implementation, we can extend DBT to other commodities, so that the poor get more money to spend for their upliftment," the finance minister said in a Facebook post.

With almost all households linked to bank accounts, the BJP government believes it is well poised to launch a more ambitious cash transfer programme.

"To reinforce the effects of growth on alleviating deprivation, but also to help those that may be left out, we need targeted schemes and policies. The government has been helping the poor by giving them subsidies. But, these are poorly targeted and leaky.

If we can realize the government's JAM — Jan Dhan Aadhaar, Mobile — vision, we can ensure that money goes directly and more quickly into the pockets of the poor and from the savings we achieve we can put even more money for the poor."

Over the next few months, the government is hoping to launch pilot runs for transfer of food subsidies in some of the Union territories even as a majority of the states remain reluctant to transition to the new mechanism that is seen to be more leakage proof.