Govt defends LPG price hike, saying it is insulated by increase in subsidy

New Delhi: The LPG price is derived based on international market price for the previous month. LPG price for cooking for consumers under PAHAL (DBTL) is subsidized by the Government of India. The subsidy quantum given to the PAHAL consumers by way of Direct Benefit Transfer is the difference between the market-determined price and the subsidized price.

On account of a sharp increase in the international price of LPG during January, 2020 from $ 448/MT to $ 567/MT, there has been a hike of Rs 144.50 for a 14.2 kg. LPG cylinder in the market-determined price of domestic non-subsidised LPG at Delhi. While the price of domestic non-subsidized LPG cylinder has increased from Rs 714 per cylinder to Rs 858.50 per cylinder, the subsidy amount to subsidized consumers in Delhi has increased from Rs 153.86 per cylinder to Rs 291.48 per cylinder. In view of the subsidized price determined by the Government, the subsidized LPG consumers are insulated from the volatility of LPG prices in the international market.

Today, the national LPG coverage is about 97%, with more than 27.76 crore connections. Therefore, out of the about 27.76 crore consumers, in respect of about 26.12 crore consumers the increase in price is borne by the Government by enhancing the subsidy component.

For a 14.2 kg. cylinder, the subsidy borne by Government to domestic users is increased from Rs 153.86 per cylinder to Rs 291.48 per cylinder. For PMUY consumers, the subsidy borne by Government has increased from Rs 174.86 per cylinder to Rs 312.48 per cylinder. Therefore, the impact of price hike is mostly borne by the Government by enhancing the subsidy for subsidized and PMUY consumers.

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