Eligibility and procedure of lpg gas subsidy in india
Introduction
LPG gas subsidy is one of the most debated topical topics in India. Extensive credit should be provided for importing LPG and LPG brands in India, and thus it is necessary to ensure there is uniform standardisation in terms of quality, quantity, and quantity as well as fair pricing.
The government of India has put some measures in place, which makes the import of LPG gas as profitable as possible. The LPG subsidy has been implemented since 2005 and presents a lucrative margin for international players.
The first step towards establishing how and when LPG price in India might rise is through the LPG rate of subsidy calculation. In 2021, in order to prevent the LPG price from rising, the LPG rate of subsidy has been adjusted, giving LPG brands an incentive to boost exports.
The first step is for the LPG rate of subsidy calculation to be completed via the Agency Developmental Record (ADR) system of India.
Once exports are started, a marketing methodology is developed to ensure timely and effective prices are made clear. This method usually involves both regular disbursement of funds and mobilisation of alternative channels of the same. In 2016, the number of LPG cylinders supplied to local agencies increased substantially.
Several agencies have been assisting lakhs of households across the country, and thus supply is not difficult. On the contrary, promoting LPG fuel through efficient means is difficult to do because of simple supply chains and poor credit mechanism, as well as repeated deficiencies and such capacity in finances.
The beginning of this problem started in 2013 with availability being the greatest source of LPG fuel due to poor credit systems and traditional distillation techniques.
Some agencies that don’t produce LPG fuel but offer it on a freehold basis, are contract manufacturers. These units receive raw materials from the LPG manufacturing units through brokers, who in turn handle the credit of the dealers. It is alleged that the final cost is an inflated commodity.
Ideally, state-run agencies should come up with a mechanism to ensure that the LPG price is increased, and then distribute the cost appropriately to retailers.
As a result, LPG retailers are left to recover their cost, but they may not be in a position to make ends meet due to contract manufacturers offering lower prices than what they are selling actual LPG units for.
However, they have given us an idea on how these agencies can coordinate with their retailers to ensure faster business venture.
Eligibility
The First Generation LPG Oil and Gas Corporation (GNG CIL) criteria requires the domestic LPG importers to prove the need of the subsidy scheme, and prove they have brought LPG supplies from an LPG manufacturing unit to provide to the Domestic LPG Gas Retailers as on date, which has helped in establishing the eligibility of the LPG subsidy regime.
All our domestic LPG cylinder shops are required to make “obligation provisions” within a period of time. They should be requesting for the subsidy of at least thirty-five percent of the total earnings, which is up to Rs 6 lakh/fuel. One way of doing this is by giving the dealer a cut of their profits as per item or the arrangement agreement.
Last but not least, to submit an allocation request for LPG fuel should be submitted in to their system, and the rebate amount should be revised.
Ethical Considerations
The only disadvantage is the rise in lack of corporate vision and consolidation due to poor credit techniques, which are major factors for LPG dealers to see profits in their business, and the incentives, which give them incentives to have increased production facilities.
The Export Promotion Policy (EPP) on LPG should not only facilitate the increment of volume of LPG but enhance efficient credit lending and legitimate purchase policy.
A technical practitioner, who understands the LPG industry needs to get the best research and development done on the prices and logistics of LPG, and anything that can be done in a way that both the government and retailers need to have the best result (satisfy consumers, meet demand, and reduce cost) is an effective strategy.
Conclusion
LPG fuel is one of the most extensively consumed resources in India. The LPG rate of subsidy has become a lucrative opportunity for the LPG players, but yet, no policy has yet been drafted to provide efficient pricing.
