Aadhaar-linked LPG: Govt says Rs 15,000 cr saved, survey says only Rs 14 cr in FY15

What has been the net benefit that arose out of using Aadhaar within the Direct Benefits Transfer of liquefied petroleum gas (LPG) or PAHAL scheme as it is now called? Research done by the International Institute for Sustainable Development (IISD) says the benefit from Aadhaar in the scheme through de-duplication of records was at best limited to Rs 12-14 crore in 2014-15 and about Rs 120.90 crore in 2015-16, that, too, before accounting for any additional costs.

UntitledThis is in sharp contrast to the figures quoted by the government or the founder of Aadhaar. Nandan Nilekani wrote in The Indian Express on March 9 that there was “visible evidence of its utility with Rs 10,000 crore-plus savings in LPG subsidy in one year alone”. He was quoted on December 7, 2015 in The Indian Express as saying, “The government has also saved $2.5 billion in one year by linking LPG users to Aadhaar numbers.” Recently, in a debate in the Lok Sabha, Finance Minister Arun Jaitley said, “Today, by just using the technology and targeting the subsidy, in the initial stages itself, the saving for the central government has been Rs 15,000 crore.” He was also speaking on the use of Aadhaar in the LPG distribution scheme.

IISD’s researcher Kieran Clarke, in his paper, “More ghost savings: Understanding fiscal impact of India’s direct transfer program – Update”, has argued that the government has miscalculated the savings by crediting the Aadhaar platform for the work that oil marketing companies (OMCs) had already done of weeding out duplicates and ghost customers before Aadhaar or DBTL was introduced. He concludes that the list-based weeding out of duplicates by the OMCs was 15-20 times more effective in identifying irregular connections than the Aadhaar system. He summarises, “It is the connection regularisation program, which in no way required the introduction of either DBTL or Aadhaar, which has overwhelmingly been responsible for the identification and removal of invalid connections and associated consumption.”

Reacting to the study, Dr A B P Pandey, director general and mission director of Unique Identification Authority of India said, “It is not possible to segregate and say how much Aadhaar achieved and how much was achieved otherwise by OMCs. We have to look at it as a whole collective exercise that began in 2012. But, without Aadhaar the benefits of de-duplication and weeding out would be temporary. Aadhaar has ensured that those who were weeded out don’t come back in.”

He also said, “Everyone knew then that Aadhaar is being introduced and it would catch people so they did their task more diligently.”

Clarke, besides citing data of how the OMCs identified duplicate connections and then weeded a substantial part out, also cites the S G Dhande committee report of May 2014 which stated that “In the 291 districts covered under DBTL, 618,000 duplicate connections were identified out of over 40 million LPG consumers who provided Aadhaar numbers.” He also cites the government of India’s affidavit in July 2015 to the Supreme Court while advocating Aadhaar which notes that IOCL checked LPG connections against 80.8 million cards and found 800,000 instances of duplicate connections.

Clarke in his report states that by March 2012, the OMCs had already blocked 3.8 million connections and by November 2012 the OMCS had “therefore identified (through a process unconnected to DBTL or Aadhaar) at least 26.6 million potential multiple connections and of these blocked 5.3 million with a further 21.3 million potential connections undergoing a process of verification.”

He writes that by May 2013, the government noted it had blocked 6.3 million duplicate connections, raising the total identified and blocked connections to at least 15.2 million which continued to be reported by the OMCs as part of the total connections given at that time. By March 2015, the number had risen to 12.7 million multiple connections – roughly half of the 26.6 million potential multiple connections identified in November 2012.

Using finance ministry’s figures, Clarke notes, “As of April 2015, there were 85 million LPG customers linked to Aadhaar – over half of whom had been linked as part of previous implementation of DBTL by UPA government in 2013-14.” He draws the assumption from it that approximately 35 million connections were newly linked to Aadhaar prior to April 1, 2015 through the PAHAL scheme by current government. Calculating the differential monthly per-cylinder subsidy rates, he also assumes that potentially irregular connections were identified and cancelled right at registration. Based on these assumptions, and not including the cost of implementing Aadhaar in DBTL, he concludes that roughly Rs 12-14 crore was saved in 2014-15 through the Aadhaar-based de-duplication process. Doing a similar exercise for 2015-16, Clarke assesses the savings in 2015-16 to be around Rs 120.90 crore.

“Aadhaar seeding is still going on. One cannot assess the total benefits of Aadhaar in the schemes before the exercise is completed. To derive the benefits of the de-duplication Aadhaar is essential. Or, just like it has always happened in the ration cards, you shall see ghost connections resurfacing every two years after the weeding exercise,” Pande explained. “There is no system better equipped to deal with ghost cards than Aadhaar,” he added.