New Delhi: Prime Minister Narendra Modi on Sunday said the landmark scheme to give cooking gas (liqueified petroleum gas, or LPG) consumers cash subsidy instead of selling to them at below the market rate has stopped leakages, saving thousands of crores of rupees.

The use of technology has helped the transfer of cash subsidy to the actual users of the cooking fuel, he said at a Nasscom event. “My estimate is that at least 10% of the leakages has been stopped, saving thousands of crore of rupees," he said. From 1 January, all LPG consumers in the country are entitled to get cash subsidy in their bank accounts, which they can use to pay for a cooking gas refill at the market price.

Previously, government gave subsidy to oil companies which sold LPG at subsidised rates to consumers. Since the LPG meant for households cost much less than the market-price refill that commercial establishments like hotels and restaurants were supposed to use, there were diversions and blackmarketing. The direct benefit transfer scheme for LPG subsidy, now renamed PaHaL or Pratyaksha Hastaantarit Laabh, now covers 75% of LPG consumers in the country and is the world’s largest cash transfer programme. Under PaHaL, LPG cylinders are sold at market rates and consumers are entitled to get the subsidy directly into their bank accounts. This is done either through an Aadhaar linkage or a bank account linkage. PaHaL aims to reduce diversion and eliminate duplicate or bogus LPG connections.

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