Modi for LPG cap rise

Patna/New Delhi, Jan. 16: Deputy chief minister Sushil Kumar Modi today suggested the Centre's cap on subsidised LPG cylinders be increased to 12 per year at the pre-budget meeting of state finance ministers in New Delhi.

Chaired by Union finance minister P. Chidambaram, Modi ' who holds Bihar's finance portfolio ' said at the meeting: "The Union government has largely withdrawn the subsidy on LPG cylinders and restricted it to the limit of six cylinders per year which is highly inadequate. The poor and middle classes of society are the worst sufferers of this guideline. It is suggested that the subsidy cap be enhanced to 12 cylinders a year."

The cap of six subsidised LPG cylinders was introduced in September last year, entitling domestic consumers to three subsidised cylinders this fiscal year. The Centre has been considering a proposal to increase the cap for the past two months but nothing official has come to the fore.

At present, a subsidised domestic cylinder costs around Rs 420 in Patna against the non-subsidised price of around Rs 990.

Modi also demanded the viability gap funding (VGF) for state highway projects under the public-private partnership mode be increased to 60 per cent from the existing 40 per cent as the toll collected on such roads would not be sufficient to recover the project cost invested by private parties.

The central and state governments share the VGF funds. A source said investors were not showing interest in the Rs 2,234-crore Ganga Driveway Project (construction of 20km elevated road along the Ganga) in Patna under PPP mode. Requiring a minimum private investment of Rs 1,340 crore with rest coming through VGF, private parties are not confident of getting adequate revenue through toll collection, the source added.

On the move to cover cities with population exceeding 5 lakh under Phase II of the Jawaharlal Nehru National Urban Renewal Mission (JNNURM), Bihar wants five of its biggest cities to be covered. At present, only Patna and Gaya are covered under the scheme. Modi said: "Since the level of urbanisation differs across states, this policy would not benefit the interests of state likes Bihar. I would suggest… all towns having municipal bodies should be covered under the JNNURM-II. If for some reason, it's not found feasible, at least the five big cities ' Patna, Gaya, Muzaffarpur, Bhagalpur and Darbhanga ' regardless of their population should be covered," he added.

With the state being low on the ladder of per capita income and the third most populous state according to the 2011 census, Modi demanded modifications in the Gadgil formula in deciding the normal central assistance plan transfer.

Modi termed the Centre's 60 per cent weightage on population according to the 1971 census while awarding financial grants "regressive". He said: "I would request the per capita income be given a weight of 70 per cent and population 20 per cent based on the 2011 census. The remaining 10 per cent should go for fiscal management and national objective."

He also spoke for an amendment in the Fiscal Responsibility and Budget Management Act enabling the cut-off for fiscal deficit to be raised from the current 3 per cent to 4 per cent for backward states.

Seeking changes in central assistance policy (of the proposed central assistance of Rs 8,57,786 crore, approximately 33 per cent is unconditional, he said), Modi added that the assistance should flow on the basis of objective distribution formula with freedom to states to decide their priorities.

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