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Why subsidy to consumer of twelve gas cylinders in a year?

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Why subsidy to consumer of twelve gas cylinders in a year?
CA DEV KUMAR KOTHARI By: CA DEV KUMAR KOTHARI
January 30, 2015
All Articles by: CA DEV KUMAR KOTHARI       View Profile
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Subsidy:

Subsidy may be allowed for several reasons like promoting any particular industry, increasing consumption of any item like for health of people, subsidy for infrastructure, education etc. In some areas subsidy to community at large is required and it is availed by many of people even if one can afford things or services at full price.

In case of consumable goods like cooking gas, kerosene etc.  Subsidy is allowed to provide a reprieve from high cost or fluctuation in price.

Such relief should be allowed to very poor people or select class of people like retired persons or very old persons (above 70 years of age) having very limited sources of income.

Gas cylinders can be obtained by various adult members in a family|:

In a family various members can get connection / subscription gas supply /cylinders. Theoretically, if a family so want gas cylinder connection can be obtained for each of adult member in the family.

Gas consumption:

The consumers of cooking gas and poor person:

Most of consumers of cooking gas cannot be called poor people who deserves supply of gas at a subsidies rate. In fact. In context of subsidy on gas cylinders, there would be very few poor people who deserves subsidy on gas cylinders.

A person or even a family who consumes one gas cylinder in 3-4 months cannot be called a poor person or poor family. A poor family cannot afford adequate quantity of raw material for cooking which require one gas cylinder in 3-4 months.

Poor people usually cannot afford even apparatus and space required for cooking on gas stoves. They use mud made challah/ bhatti or kerosene stoves. Many use fire wood, waste, cow dung cakes etc. as fuel. Many of poor people who earn daily livelihood as daily workers far away from home do not have space to install gas cylinder, they live on work sites.

A person who can afford a gas cylinder connection, gas stove, space for installing a gas stove and gas cylinder, and who consumes more than three or four cylinders in a year cannot be called a poor person in the context of subsidy on cooking gas.

Accepting subsidy is not good:

For people who can afford to buy gas at full rate it is not proper to accept subsidy on gas. It is desirable that such people should not claim subsidy. Earlier there was no system, however, from a recent advertisement on TV channels it appears that now a consumer can avoid claim for subsidy.

This is not good, why we should accept subsidy or donation for an item which we can afford at full price.

Author recall that in case of Taxman publications the ICAI and  Taxman had entered into an arrangement under which Taxman offered its publications to CA on  duly negotiated and discounted price. However, in communications from ICAI and / or Taxman it was described as if subsidy was given. The author had objected to the word subsidy because it was not subsidy in real sense. In course of discussions with professional friends, many agreed that why we should accept subsidy when we can pay full price. Subsequently the wordings in communication was modified.

In case of cooking gas now one has to purchase cooking gas at full price and the subsidy element will be transferred to the bank account of consumer. Maximum subsidy on 12 cylinders will be ₹ 6816/- that is ₹ 568/- per month if a person consumes one cylinder a month. Family who purchases one LPG cylinder in three months subsidy per month will be just ₹ 190/- per month.

An appeal to purchase cooking gas at full price:

Recently an advertisement has been launched (model Karishma Singh) appealing to waive subsidy claim on LPG cylinders, by capable persons. I fully support this and appeal to all my professional fellows (CA, CMA,CS, Advocates, MBA, and other professionals like doctors, engineers, architects and all persons who can afford to waive such subsidy without any problem.

Various professional bodies can also appeal to its members to waive claim for subsidy on LPG cyliners.

Bar on subsidy of employees earning ₹ 12000/- or more per month:

The Central Government, all state governments and local bodies (e.g. municipalities)

Public sector enterprises etc. must made it a condition of employment that any employee (or his relative) of such organisation will not be entitled to claim subsidy on LPG cylinders. This is because all such employees are not poor person in context of such subsidy. Even a peon earns as salary of more than ₹ 12000/- per month on lower side, many of them also get gifts and speed money so none of employees of such organisations can be called poor people and do not deserve subsidy on LPG.

 A bar on such subsidy should be through part of conditions for  such subsidy and  not by change in terms and conditions of employment to avoid  workers unions, trade unions agitations and legal disputes.

Suitable rule can be made to ensure that a salary earner who has monthly salary income of Rs. twelve thousand or more will not be entitled to subsidy on LPG directly or indirectly through family members.

Misuse of subsidy:

It is common knowledge that many ration card holders are using ration card for availing subsidised items and transferring such items to other persons at higher price. One can notice a neighbour using LPG as cooking fuel but purchasing kerosene on ration card and selling the same at higher price to nearby tea stall / cookery owners or taxi operator / Auto Rickshaw operator who mixes kerosene with diesel. Author had surrendered ration cards long ago, as it is not now required as identity proof, however, many people who has attained status of middle class family and even rich family are still holding ration cards and using subsidies items either themselves or for their servants. If such items are not used then they are sold or ration card is provided to others to avail subsidised items. A person who can afford a team of servants on full time and / or part time basis should not be allowed to buy goods on subsidised rates on ration cards of family members or of servants.

Survey for deserving ration card holders:

Extensive survey should be carried out to find out deserving ration card holders that is people who really deserves essential goods like food grains, sugar, kerosene, soaps and toiletries, some type of cloth and other items sold through ration shops at concessional rates.

It is common knowledge and feeling of public that ration shops are making money by diverting subsidised items to areas other than deserving area. Unclaimed subsidised stocks are sold in open market and money is made.

However, as per public grapevine, the problem is that many of ration shop owners are having links with politicians and they are taking advantages of their connections with politicians and bureaucrats.

Popularise pressure cookers for cooking and other power saving devices at homes:

Pressure cookers for cooking must be popularised by extensive advertisements to save consumption of fuels. Use of pressure cookers saves power and fuel consumption by about 40 to 60%.

Other domestic appliances with power saving and pollutions saving features must be popularised and to make them affordable excise duty and sales tax must be fully exempted. Subsidy on such capital goods can be a good idea because a onetime subsidy on capital goods will go a long way in saving subsidy on consumables like LPG, kerosene and diesel.

 

By: CA DEV KUMAR KOTHARI - January 30, 2015

 

Discussions to this article

 

Hello,

Shri Dev kothari ji.I am very much agreed with your article. Today it is the matter of concern that the how to stop the misuse of the subsidy. But there is a big problem in this issue, that how to identify the real persons who are in immense requirement of subsidy. Let us divide the people who are misusing the subsidy in two parts:

First part , Subsidy misused by one part of the people, who use the Consumer card of the other unaware person not availing the cylinder facility in real:I am not taking any political party side but Modi Government took a great initiative for stopping subsidy misused by some peoples through fake materials or ID. Today as we all know that subsidy amount is directly transferred to the respective person's account and the person have to pay full price of the cylinder at the time of taking delivery resulting in subsidized cylinder.This however to certain extent will be successful to stop the misuse of the subsidy.

Second part,those persons who really dont deserve the subsidy as because they are capable and earning good so as to pay in full for the cylinder instead of availing subsidy: As India is one of the most populated and world' s Largest Democratic country, so for implementing any new system in India takes a long time. Here, what i want to tell is that it is not possible to identify the exact person who require the subsidy. We have to put the suggestions that how to identify those person and making the subsidy unavailable to them.

I have some of the suggestions, in which one at the top is : to Interlink the PAN CARD and Income tax returns with the Consumer ID through a software. Set a limit in the software that the person who have filed the Yearly Income, Say more than ₹ 1,50,000 the system will reject the Subsidy amount to be transferred to the person crossing the limit.

This opinion is not to hurt the author, this is mere a suggestion and my view.

Regards,

CA Gagan Jain

CA DEV KUMAR KOTHARI By: Anil Mishra
Dated: January 31, 2015

With reference to discussions webhosted by Shri Gagan Jain / Shri Anil Mishra, I have sent another article for webhosting. I have suggested - no subsidy to people who lives in Pucca residential houses and salary earner with monthly income of ₹ 12000/- (plus for more than two dependents).

These consumers can be easily found by looking at address, premises and the gas dealer can report.

Subsidy on consumables must be considered as charity - why a well to do person should accept such charity/ daan/ dharmada....

" Yadi daan ka khana nahi khana chah te to daan ki gas par khana nahin pakana chahiye" .

Thanks for your interest.

D.K.Kothari

CA DEV KUMAR KOTHARI By: DEV KUMAR KOTHARI
Dated: February 20, 2015

 

 

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