Economy Dec 26, 2012
State-run Indian Oil Corporation, which posted a record Rs 12,840 crore loss in the first six months of the current financial year, is heaving a sigh of relief.
According to the company's Chairman RS Butola, cash transfers and capping of subsidised LPG cylinders will enable better functioning of oil and gas markets.
"The principle of pricing the product at the market level would help, irrespective of whether the number of subsidised cylinders is capped at six or nine," he told Business Standard in an interview.
Selling at market price or limiting of subsidy "puts resources to an optimal use", he has said.
But he does not think the company has any role to play in transferring the cash to the beneficiaries' accounts.
"We hope the subsidy should be directly passed on by the government. We do not want any burden on us," he said adding the company has requested the government to this effect.
His comments offer testimony to the rising suspicion that direct cash transfer programme is not foolproof. Indian Oil has already done pilots for kerosene subsidy transfer.
In Alwar, Rajasthan, kerosene supplied through public distribution system was replaced by cash transfer to the target consumers.
This had resulted in a sharp 80 percent decline in the off-take of kerosene in the district to just 14 kilolitres, which is a pointer to a fall in diversion of kerosene for adulteration, an article in the Business Standard had said.
But according to an earlier Firstpost report, beneficiaries of the kerosene subsidy scheme in Kotkasim town in Rajasthan have waited for one year for the subsidy through cash transfer.
The company is, however, working out the mechanism to roll out the LPG subsidy in 51 districts.
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