Review of the Direct Benefit Transfer for LPG Scheme Committee Report May 2014, New Delhi Review of Direct Benefit Transfer for LPG Scheme CommiTTee RePort may 2014, New Delhi Review of Direct Benefit Transfer for LPG Scheme 1 2 Review of Direct Benefit Transfer for LPG Scheme !"##"$%&'%($)*+,-##).% !"#$%&'(%!)*"% +,-.,#'.(/% &0102#.(%34%5,#.36,78%'19%:'#7.'6%;'2/% +$'2#.0%<$'='1/% :,>%?,6$0% % ?,'.%+0./% % @,%$,.,A(%27A80#%#$,%.,B3.#%34%#$,%-3880##,,%-312#0#7#,9%#3%.,=0,>%#$,%471-#03101C%34%#$,%?<DE% 2-$,8,%=09,%&F5:;%6,##,.%:3%5G*H)*IJHJ!)*!GE5;%9'#,9%!I#$%K,A.7'.(%!)*"L% % M37.2%+01-,.,6(/% % % +;%?$'19,%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%N106%O$'19,6>'6% P$'0.8'1%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%&,8A,.% % % % +'7.'A$%;'.C%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%N17.'C%Q'01% &,8A,.% %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%&,8A,.% % % % :09$0%O$'.,%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%R0S'(%&'9'1% &,8A,.% %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%&,8A,.% % % % N5%T3#'%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%+O%P$'U.'A'.#0% &,8A,.%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%&,8A,.% % % % :%Q'8A71'#$'1%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%:,,.'S%&0##'6%%%%%%%%%%%%%%%%%%%%%%%%%%%%% &,8A,.% %%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%&,8A,.% % % % &%:,1,% % &,8A,.%+,-.,#'.(% &,8A,.% Review of Direct Benefit Transfer for LPG Scheme 3 4 Review of Direct Benefit Transfer for LPG Scheme Acknowledgement This Committee acknowledges the active participation, excellent cooperation, and constructive ideas received from all the members of the Committee without which this report would not be possible. It would also like to acknowledge and appreciate the contributions of the officials of Ministry of Finance, UIDAI, Planning Commission, Registrar General & Census Commissioner of India, National Payment Corporation of India, Oil Marketing Companies, State Bank of India and Other Banks and Ministry of Petroleum and Natural Gas who wholeheartedly participated in the deliberations of the Committee and provided invaluable insights. It also acknowledges the participation of all LPG distributors, NGOs, Consumer groups, LPG consumers and Citizens who appeared before the Committee and gave valuable suggestions. The Committee appreciates the excellent administrative and secretarial support provided by IOC for all site visits and enabling interaction with stakeholders of the DBTL scheme. The Committee acknowledges the constant support, ideas and help provided by the officials of the Ministry of Petroleum and Natural Gas without which this report would not be possible. Review of Direct Benefit Transfer for LPG Scheme 5 6 Review of Direct Benefit Transfer for LPG Scheme Table of Contents Page No. 1 executive Summary . 7 2 Abbreviations . 9 3 Section i – introduction . 10 4 Section ii – Genesis of Direct Subsidy Transfer in LPG . 13 Backdrop Task Force on Subsidy Task Force Recommendations and implementation JS Level Committee Implementation of DBTL Scheme DBTL Kept in Abeyance 5 Section iii – Review of Scheme by Committee . 18 Stakeholders Cost-Benefit Analysis of DBTL DBTL Scheme Robustness 6 Section iV – Recommendations . 22 7 Annexures . 37 Review of Direct Benefit Transfer for LPG Scheme 7 8 Review of Direct Benefit Transfer for LPG Scheme Executive Summary The Direct Benefit Transfer for LPG (DBTL) scheme was rolled out in 291 districts in the country from 1st June 2013 in six phases. it covered nearly 10 crore consumers with over 3770 distributors across the three PSU oil marketing Companies with an aim to achieve the objective of efficient subsidy administration. An amount of Rs. 5400 crore was successfully transferred to more than 2.8 crore LPG consumers across the country. While preliminary results indicated that the scheme met its primary objective of curbing leakages in the distribution system, the speed at which it was rolled out and inclusion of low Aadhaar districts gave rise to consumer grievances. The Government of india took cognizance of this and directed that the scheme be held in abeyance and constituted a Committee on 7th march 2014 to review the scheme and submit its report to the Government of india after consultation with the stakeholders. The Committee has examined the functioning of the DBTL scheme in depth by meeting all stakeholders to understand every aspect of the scheme and the difficulties encountered by the stakeholders, primarily LPG consumers. The Committee after a detailed study of the scheme design, architecture and implementation structure, audit reports, consumer feedback and interactions with the stakeholders, strongly recommends that DBTL scheme should be recommenced as it is a very efficient way to disburse subsidies. The Committee recognises that although the scheme design is indeed very robust and scalable which prevents leakages, it has suggested several systemic changes and enhancements to mitigate the hardships reported by the LPG consumers. These have been presented as 30 recommendations covering various aspects of the scheme. The major recommendations are: • A Centralized Grievance Resolution • Permanent advance to be adequate to finance refill purchase • Reimburse LPG subsidy while consumer is waiting to become eligible to receive the subsidy • A preparatory period prior to scheme launch • Minimum thresholds for launch of scheme launch and for the end of grace period • Targeted enrollment of LPG consumers • Visibility of NPCi Aadhaar seeding status at all points of contact/SmS/USSD • Incentivize early adopters of the scheme through a free cylinder • Improve last mile access to Banking • Enhance Subsidy Salience Review of Direct Benefit Transfer for LPG Scheme 9 10 Review of Direct Benefit Transfer for LPG Scheme Abbreviations AEBA Aadhaar-enabled Bank Account APB Aadhaar Payments Bridge A R S Aadhaar Registration Sheet BPC Bharat Petroleum Corporation C A G Comptroller and Auditor General CBS Core Banking System C C P A Cabinet Committee on Political Affairs C T C Cash Transfer Compliant DFS Department of Financial Services Doe Department of expenditure DoF Department of Fertilizers e i D enrollment identification eKYC electronic Know Your Customer HPC Hindustan Petroleum Corporation ieC information, education and Communication IOC indian oil Corporation iT information Technology i V R S interactive Voice Response System KYC Know Your Customer LDm Lead District manager LPG Liquefied Petroleum Gas moF ministry of Finance moPNG ministry of Petroleum and Natural Gas NiC National informatics Centre NPC i National Payment Corporation of india OMC oil marketing Company PDS Public Distribution System R A S F Remote Aadhaar Seeding Framework RBI Reserve Bank of india RGi Registrar General of india UiDAi Unique identification Authority of india Review of Direct Benefit Transfer for LPG Scheme 11 Section I Introduction 12 Review of Direct Benefit Transfer for LPG Scheme Section I Introduction The Direct Benefit Transfer for LPG (DBTL) scheme was rolled out in 291 districts in the country from 1st June 2013 in six phases covering nearly 10 crore consumers with over 3770 distributors across the three PSU oil marketing Companies. An amount of Rs.5400 crore was successfully transferred to more than 2.8 crore LPG consumers across the country till 8th march 2014. Preliminary results show that the results expected from the scheme in terms of detection of duplicate connections and reduction in diversion of subsidized LPG cylinders were achieved. The scheme was innovative, involved multiple stakeholders and was implemented on a large scale over a short period of time. it invoked both praise and criticism based on the individual experiences of the various stakeholders, particularly the consumers. The scheme was both critiqued and supported by media, consumer forums. it also evoked keen interest of policy makers and business analysts. The scheme implementation was rapidly scaled up from a pilot implementation in 20 districts to 291 districts in a short period of time. This threw up several challenges for the consumers, especially in districts where Aadhaar penetration was low. Thus, the Government of india decided to keep the scheme in abeyance on 7th march 2014 and constituted a Committee (Annexure 1) to review the scheme and submit its report to the Government of india after consultation with the stakeholders. The Committee was given the task to review the functioning of the DBTL scheme keeping in mind the difficulties experienced by the beneficiaries of the scheme. The Committee was also given the mandate to consult the stakeholders of the scheme and submit its recommendations on improving the scheme design and implementation. The Committee undertook a detailed study of the scheme design, architecture, salient features, modalities