The price of domestic LPG cylinders has been cut by Rs 200 for all connections, in all markets across the country, the Union government announced on Tuesday. This decision comes amid high inflation and ahead of crucial state and general elections. India has a total of 314 million domestic LPG consumers, according to government data.
The across-the-board reduction in the LPG cylinder price — the first change in its price in six months — will come into effect on Wednesday. The price of 14.2 kg domestic LPG cylinders was last changed in March when it was raised by Rs 50. Before this, the domestic LPG cylinder price was raised back in July 2022.
“This is a gift to crores of my sisters of the country on the occasion of Raksha Bandhan. Our government will always do everything possible that improves people’s quality of life and benefits the poor and middle class,” Prime Minister Narendra Modi posted on X.
The decision will impact millions of households that have been feeling the pinch of the rise in food prices over the past few months. India's annual retail inflation hit a 15-month high of 7.44 per cent in July and food price inflation touched 11.5 per cent.
In a battle against high food inflation, being driven by uneven and scanty rainfall, the government has taken a series of measures to boost supplies of essential food items, including rice, onion, and tomato.
It has stepped up sales of subsidised vegetables, particularly onion and tomato, through its distribution network. The government is also considering to ease import norms for wheat.
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It has also allowed mills to sell more sugar. It recently imposed a 40 per cent Customs Duty on onion exports to control domestic prices. Additionally, the government has placed export curbs on key categories of rice.
Finance Minister Nirmala Sitharaman last week said the government’s priority is to tame inflation to ensure sustained economic growth.
The latest reduction in the domestic LPG cylinder price will be in addition to the existing targeted subsidy of Rs 200 per cylinder to Pradhan Mantri Ujjwala Yojana (PMUY) households.
The government, according to a Reuters report, will have to spend an additional Rs 4,000 crore for the enhanced cooking gas subsidy, in addition to over Rs 7,600 crore it has budgeted for the current fiscal year. India imports about 60 per cent of its liquefied petroleum gas requirement, and LPG prices globally have risen 303 per cent since April 2020.
In Delhi, for instance, the decision will bring down the cost of a 14.2 kg cylinder to Rs 903 per cylinder. Meanwhile, PMUY households will receive it for Rs 703 per cylinder.
Back in May 2022, the government announced a targeted subsidy of Rs 200 per cooking gas (14.2 kg) cylinder for 90 million PMUY beneficiaries for up to 12 refills for 2022-23. The subsidy was extended by a year in March at a total cost of Rs 7,680 crore.
More Ujjwala beneficiaries
The number of PMUY beneficiaries currently stands at 96 million. On Tuesday, the government announced that it will shortly start distribution of PMUY connections to a further 7.5 million women from poor households who do not have an LPG connection. This will increase the total number of beneficiaries under PMUY to 103.5 million, the government said.
The petroleum ministry said the measure has been taken to clear pending PMUY applications and to provide deposit-free LPG connections to all eligible households. “The reduction in cooking gas prices is aimed at providing direct relief to families and individuals, while also supporting the government’s larger goal of ensuring affordable access to essential items,” Petroleum and Natural Gas Minister Hardeep Singh Puri said.
The data from the Petroleum Planning & Analysis Cell shows LPG penetration at 99.9 per cent in 2022, mainly owing to the PMUY scheme.
About 90 per cent of LPG was consumed by households, 8 per cent by industrial users, and 2 per cent by vehicles in 2022.
Oil marketing companies sold nearly 29.34 million tonnes of LPG in FY23, of which about 86.5 per cent was sold in the domestic sector. There has been a 95 per cent increase in India’s LPG consumption from 14.8 crore in 2014-15.