Government has finally changed its status quo of voluntary “Give it up” slogan to mandatory debarring citizens who have income above 10 lakh per annum to avail LPG subsidy. This is said to be a major step to restructure the overall method of subsidy.
Few merits are:
1) Beginning of progressive structure for subsidies.
2) Fund saved can be used for other basic necessities of life like Health, Agriculture whose share in Budget has been low.
3) Would lead to lesser consumption of LPG & subsequently lesser wastage in households devoid of subsidy.
4) Nearly all LPG is through imports, CAD can be expected to go further low.
5) Misuse of subsidized cylinders to be stopped.
6) Will make the government to think on other subsidies which may also be removed like electricity, etc.
Few merits are:
1) Beginning of progressive structure for subsidies.
2) Fund saved can be used for other basic necessities of life like Health, Agriculture whose share in Budget has been low.
3) Would lead to lesser consumption of LPG & subsequently lesser wastage in households devoid of subsidy.
4) Nearly all LPG is through imports, CAD can be expected to go further low.
5) Misuse of subsidized cylinders to be stopped.
6) Will make the government to think on other subsidies which may also be removed like electricity, etc.
Apart from this, Government should take more steps to reduce the reliance on LPG & switch to cleaner forms of fuels whose funds can be taken from the cash subsidy saved in the new scheme. Creating a team for R&D should now be the immediate step by Government as the LPG prices are not expected to stay low in years to come, and with the growth of GDP along with depreciation of rupee, 10lpa income slab might not be sufficient in years to come.
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