Domestic LPG cylinder dearer by ~25, up ~125 in a month
The price of a domestic cooking gas (LPG or liquefied petroleum gas) cylinder has been hiked by ~25 a piece from Monday, taking the cost of a 14.2 kg refill to ~819 in New Delhi.
The price of commercial LPG cylinders of 19 kg was hiked by ~95 apiece to ~1,614. The prices were hiked similarly across the country. After the latest revision, a domestic LPG cylinder is now ~125 costlier than a month ago.
LPG prices are generally revised at the beginning of a month, but they were hiked thrice in February. The price was increased from ~694 a cylinder in January to ~719 on February 4. It was again hiked by ~50 to ~769 a cylinder on February 15 in the national capital. A third price increase of ~25 per cylinder was done on February 25.
According to officials in the know, all consumers will have to bear the burden of these hikes as there is no subsidy available on cooking gas. The Centre had stopped offering financial support to consumers in the form of a direct benefit transfer (cash transfer to bank account of beneficiary) of LPG subsidy. It started eliminating LPG subsidy from around June 2020 through small but sustained hikes in the price of subsidised domestic cylinders. After the LPG subsidy was pruned, the oil marketing companies also reduced LPG prices and then kept it unchanged at ~594 a cylinder from July to November-end 2020.
Currently, there is partial support for consumers in far-flung areas as the government continues to bear a portion of the additional freight costs. This small freight subsidy is usually given to consumers located usually away from LPG depots.
This freight subsidy varies around ~30 a cylinder. This approach results in a significant subsidy saving for the Centre. Allocation for petroleum (LPG and kerosene) subsidy being reduced from ~40,915 crore in 2020-2021 to ~12,995 crore in 2021-2022.
There is nil allocation for kerosene subsidy announced in the Union Budget 2021-2022. It is expected that most of the petroleum subsidy allocation will be directed to offering deposit-free connections to 10 million new Pradhan Mantri Ujjwala Yojana (PMUY) recipients. This will add to the 80 million existing PMUY consumers in the country who were given an upfront interest-free loan of around ~1,600 a connection, but were then buying cylinders at market price. During the lockdowns, the Centre offered three completely free LPG cylinders to PMUY beneficiaries.