The LPG puzzle

Whichever way one slices the data, it is clear that claims of a Rs 15,000 crore saving in LPG subsidy solely through Aadhaar are erroneous.


Eugene Wigner, the great physics Nobel laureate, once said that in national politics, the truth is often less popular than a clever lie. Thus it has been with the manner in which the Aadhaar legislation has been pummelled through Parliament. In today’s technology jargon, then PM Manmohan Singh and Congress president Sonia Gandhi were astute political venture capitalists in wholeheartedly backing a radically innovative start-up in 2009: The Aadhaar project. Irony died a thousand deaths when in the current charged environment of purported anti-national university campuses, Aadhaar is being hailed by the BJP’s minister of finance, Arun Jaitley, while a standing committee led by the BJP’s own former finance minister, Yashwant Sinha, rejected Aadhaar as an anti-national project in 2011. That committee devoted an entire section in its report to “national security vs UID” and insinuated that Aadhaar aided illegal immigrants and infiltration from across the borders. When the principal opposition party, the Congress, supports the Aadhaar law in much of the letter and all of the spirit, it is suspiciously mischievous of the government to mischaracterise, mislead and misinform the people about Aadhaar in its conniving attempts to pass the bill.

The government’s too-clever-by-half strategy of calling the Aadhaar bill the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Bill was an obvious ploy to subvert discussion in the Rajya Sabha by deeming it a money bill. The word “finance” needed to be sneaked into the main element of the bill and hence this title. To target delivery of subsidies, it is imperative to first determine who is eligible for that subsidy. This can be done only with income and other such information, which is outside the domain of the Aadhaar programme. When confronted by privacy sceptics, proponents of Aadhaar defended it under the guise of the Aadhaar database having only demographic information of individuals. But now, as per the bill, Aadhaar’s only purpose is to “target” those individuals for subsidies. Either Aadhaar is an innocuous tool to verify the identity of a person or it can glean private information to target individuals for benefits. It cannot be both. Which one is it, Mr Finance Minister?

The finance minister, during the discussion in the Rajya Sabha on the Aadhaar bill, claimed that a sum of Rs 14,672 crore was saved in LPG subsidy for the year 2014-15 under the direct benefits transfer scheme. The prime minister had publicly claimed a similar savings of Rs 15,000 crore in LPG subsidy. The finance minister and his officials were confronted with evidence by independent, globally reputed think-tanks of savings on LPG subsidy being in the range of merely Rs 12 to 14 crore. The chief economic advisor of the government, in a desperate attempt to safeguard and hedge the intellectual sanctity of these dubious claims of the government, says “we estimate that the potential annual savings will be Rs 12,700 crore… We did not — and did not intend to — assert that that absolute figure was in fact the actual saving” (‘Clearing the air on LPG’, April 2, The Indian Express). In a response to a Lok Sabha question, the ministry of petroleum remarked on August 10, 2015, that there was an LPG subsidy saving of Rs 11,640 crore between FY14 and FY15. By its own admission, these savings were mainly due to a fall in global oil prices. Further, the ministry revealed that of the 15.7 crore active LPG consumers who received an average annual subsidy of Rs 3,327 each in FY14, 13.7 crore have switched to getting cash subsidy in their bank accounts rather than subsidised LPG cylinders. However, as of March 2016, only 12.3 crore LPG consumers have provided their Aadhaar numbers. Is the ministry then claiming that the remaining beneficiaries are all ghosts and duplicates? If so, how do 13.7 crore LPG consumers receive cash subsidy in their bank accounts? And how much of this saving is due to removing duplicates through Aadhaar? Whichever way one slices and dices the data, it is abundantly clear that claims of Rs 15,000 crore of saving in LPG subsidy solely through Aadhaar are erroneous and deceitful.

So, we now have the chief economic advisor of the government clearly saying that there could be a potential annual saving in LPG subsidy of Rs 12,700 crore in the future. We have the finance minister claiming on the floor of the House that there was an actual saving of Rs 14,672 crore in LPG subsidy due to the direct benefits transfer programme. And we have an independent think-tank estimating the actual saving at a paltry Rs 12 to 14 crore. Again, all three cannot be right. Which one is, Mr Finance Minister?

In its penchant for majoritarianism and loathing for debates, the Modi government has needlessly entered a chakravyuh (borrowing from the Economic Survey) in painting the Aadhaar bill as a money bill and trying to justify it using arbitrary and self-contradictory estimates. It is both sad and sardonic that a bill aimed at ushering in a clean and efficient welfare delivery regime should be so shabbily and inefficiently ushered into law. Privacy and other issues notwithstanding, Aadhaar is undoubtedly transformative as a subsidy sudhaar initiative but could do without the hype that has been built around it.

The writer is a Congress Rajya Sabha MP and former minister for rural development who initiated the use of Aadhaar in the MGNREGA and the National Social Assistance Programme. Praveen Chakravarty, fellow in political economy at the IDFC Institute, Mumbai, provided inputs.

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