In what seems to be a drastic step to the middle income group, the government has issued an order to state-run oil companies to hike the price of the subsidized cooking gases (LPG) by Rs 4 per cylinder in order to eliminate all subsidies by March 2018. The announcement was made yesterday by Oil Minister, Dharmendra Pradhan.
Previously, the government had asked state LPG providers like Indian Oil (IOC), Hindusthan Petroleum (HPCL) and Bharat Petroleum (BPCL) to raise the rates of subsidized LPG by Rs 2 per month per 14.2 kg cylinder, excluding VAT. However, now the quantum has been doubled to bring down the rate of subsidy to zero, said the oil minister in a written reply in Lok Sabha.
As of now, every Indian household who has an LPG connection is entitled to 12 cylinders of 14.2 kg per year at subsidized rates. If there are any requirements beyond that, it has to be purchased at market rates.
According to oil minister, Dharmendra Pradhan,
Public sector oil marketing companies (OMCs) were authorised to increase price of subsidised domestic LPG cylinder by Rs 2 per cylinder (14.2-kg) per month (excluding VAT) with effect from July 1, 2016.
It has to be noted that the LPG companies have increased the rates nearly 10 times since that go-ahead.
The minister further said,
The government vide its order dated May 30, 2017, has again authorised OMCs to continue to increase the effective price of subsidised domestic LPG by Rs 4 per cylinder effective June 1, 2017, per month (excluding VAT) till the reduction of government subsidy to ‘nil’, or till March 2018, or till further orders, whichever is earliest.
It is to be noted that oil prices have increased almost twice since then, the last one being on July 1, when the rates had hiked up by a mammoth Rs 32 per cylinder. Research shows that the price of subsidized LPG has already reached over Rs 477 for the 14.2 kg cylinder in Delhi in July, from Rs 419 in June last year. This hike was a result of the order issued on May 30 along with the reflection of increased rates of taxes under the new Goods and Service Tax (GST) scheme.
As of now, the rates of non subsidized gases, which the consumers have to pay after exhausting their stipulated quota, is around Rs 564.
Talking about the subsidy on the 5 kg cylinders, Pradhan said,
The price for the other subsidised cylinders (i.e. 5 kg) would be increased proportionately by the OMCs.
Reports say that there are as many as 18.11 crore consumers of subsidized LPG in the country. These include nearly 2.5 crore poor women who were given free connections during the last one year under Narendra Modi’s pet scheme ‘Pradhan Mantri Ujjwala Yojna’. Apart from them, there are 2.66 crores non-subsidized LPG consumers.