Govt trims subsidies on LPG by up to 86% in three years
Rajeev Jayaswal
NEW DELHI: Even as the price of a cooking gas cylinder continues to rise, breaching ₹1,000 for the fist time this month, the government has reduced subsidies on it by as much as 86% in the past three years, from ₹29,628 crore in 2019-20 to an estimated ₹4,000 crore in the current financial year, official data show.
The subsidy on domestic liquefied petroleum gas (LPG) through direct benefit transfer (DBT) has been stopped in many markets, including Delhi, since May 2020, when it was priced at ₹581.50 per 14.2kg cylinder. It continues to subsidise additional transportation costs to consumers in remote areas, which is often less than ₹50 per cylinder, four people aware of the development said, requesting anonymity.
The petroleum and finance ministries did not respond to repeated emailed queries on this matter seeking specific reasons for reducing subsidies sharply since 2020 despite rising prices. Cooking gas became costlier by ₹50 per cylinder on May 7, the second rate hike in less than two months, as the price for about 304.9 million households crossed ₹1,000 for a refill in many places.
The total cash transfer to customers under the Direct Benefit Transfer for LPG Consumer (DBTL) scheme has been zero since May 2020 in Delhi and some other markets, according to Petroleum Planning and Analysis Cell, the data keeper of the oil ministry. The subsidy was ₹231 and 162.43 per cylinder in March and April 2020, respectively. The shrinking subsidy is corroborated by the budget. The actual direct benefit transfer of LPG subsidy, which was ₹29,628 crore in 2019-20, fell to ₹23,667 crore in 2020-21. It was then trimmed drastically to ₹3,400 crore in the revised estimates of 2021-22 from the budget estimates (BE) of ₹12,480 crore.
The BE for 2022-23 has been kept at ₹4,000 crore. There is no data available on specific details of LPG subsidy through DBT such as number of beneficiaries, location of beneficiaries and the amount of subsidy paid to them.
“Even as amount is curtailed and number of beneficiaries have been reduced, the LPG subsidy has not yet abolished,” one of the persons mentioned above said. “The government may always expend its coverage and raise the amount of subsidy to protect the poor households, if required.”
A second person, who works in an economic ministry, said fuel prices are rising because of reasons beyond the government’s control. “Gas prices are surging because of the Ukraine war and sanctions against Russia. The situation may aggravate further if the war continues. Many countries are facing shortages of fuels,” he said. “However, we have been able to maintain supply.”
Indraprastha Gas on Sunday raised prices of CNG by ₹2 per kilo. Most taxis use CNG, which is now sold at ₹73.61 a kg in Delhi.