LPG subsidy at Rs 200/cylinder, to cost tax payer Rs 10,000 crore/year

Surprisingly, the Indian government has resurrected the LPG subsidy, bringing relief to households. After silently withdrawing the subsidy on cooking gas in the past, the government is now reinstating it at Rs 200 per cylinder.

LPG Subsidy: A New Dawn for Consumers

A Welcome Reinstatement: The Union Cabinet has taken a significant step by restoring select individuals’ subsidies. This move is set to benefit all 33 crore LPG users nationwide. The financial impact is substantial, with an annual projected cost of around Rs 10,000 crore, with this year’s cost estimated at Rs 7680 crore.

Affordability Restored: Anurag Thakur, the Minister of Information and Broadcasting, shared that the price of a cooking gas cylinder will be reduced by Rs 200 for all consumers. This reduction is aimed at making these essential resources more affordable for households.

LPG Subsidy
LPG Subsidy

Implementation Complexity: However, there remains uncertainty about how this subsidy will be rolled out. It’s unclear whether it will be credited to bank accounts or offered as a direct discount on cylinder prices.

Expanding Access: The government goes the extra mile by providing 75 lakh Ujjwala gas connections at zero cost. This step aligns with the government’s vision of promoting cleaner cooking fuel for rural households.

TopicSummary
Subsidy ReinstatementThe Indian government quietly brings back the LPG subsidy at Rs 200 per cylinder.
ScopeThe subsidy benefits 33 crore LPG users in the country.
Financial ImplicationThe annual cost is estimated at Rs 10,000 crore, with this year’s cost at Rs 7680 crore.
Reduction in PricesCooking gas cylinder prices decrease by Rs 200 for all consumers.
ImplementationThe method of disbursing the subsidy remains uncertain.
Ujjwala SchemeThe government halted LPG subsidies without formal confirmation a few years ago.
Past Subsidy WithdrawalAn additional 75 lakh Ujjwala gas connections will be given at no cost.
Taxpayer CostThe government halted LPG subsidy without formal confirmation a few years ago.
Political ContextThe move coincides with upcoming general elections in about seven months.
Consumer ExperienceThe relevant ministry will disclose the exact cost to taxpayers.
Price DisparitiesLPG prices did not align with falling global crude oil prices.
Economic ExplanationInternational benchmark price for LPG, like Saudi propane, played a role in pricing.
Domestic Price TrendsDomestic LPG prices remained stable despite international fluctuations.
Recent DevelopmentsReductions in Saudi propane prices didn’t lead to price drops in India.

A Quiet Transition:

Around 2-3 years ago, the government discreetly stopped depositing LPG subsidies into consumers’ bank accounts without formal notice. However, this revival will see Ujjwala consumers receiving a total subsidy of Rs 400 per cylinder.

The Cost to Taxpayers:

Minister Thakur deferred to the relevant ministry when questioned about the financial implications on taxpayers, hinting that the details would soon be unveiled.

Political Implications:

This revival comes when the current administration aims to regain power in the upcoming general elections, just around seven months away.

Mixed Consumer Experience:

Recently, while the government had asserted that subsidies were being credited to consumers’ bank accounts, many customers have complained of not receiving these benefits for years.

Curious Price Disparities:

Despite a considerable drop in global crude oil prices, the cost of LPG cylinders didn’t follow suit. This raised consumer questions, especially given some regions’ stability and even price increases.

Understanding the Economics:

Hardeep Singh Puri, the Minister of Petroleum and Natural Gas, explained that LPG cylinders couldn’t be lowered in proportion to global oil price reductions due to factors like the international benchmark price for LPG – Saudi propane.

Price Stagnation:

Domestic LPG prices remained relatively steady even as international prices fluctuated. This has led to a discrepancy between global trends and local realities.

Lingering Disparity: Saudi Aramco’s reduction in propane price to $450 per tonne earlier this year didn’t correspond to a drop in LPG prices within India. The current Saudi propane price for August delivery is $475, while LPG prices in India have remained high since March (refer to the chart).

In conclusion, the revival of LPG subsidies marks a turning point for consumers and the energy landscape. It remains to be seen how this move impacts households, public sentiment, and the broader economic scenario as India navigates through these changing times.

How do I start getting LPG subsidy?

By Hand: Give Form 2 to the LPG distributor in person. Via Call Centre: Dial 1800-2333-555 and do what they say to add your Aadhaar Number. On the Internet: Go to www.rasf.uiadai.gov.in and do what it tells you. By Post: Send Form 2 and other papers to the Area office address.

What is the LPG subsidy amount?

After approving an additional subsidy of Rs 200 under the Ujjwala Scheme, the total subsidy will be Rs 400 per cylinder for PMUY beneficiaries. Prime Minister Narendra Modi tweeted that the price cut in LPG gas cylinders will facilitate women and make their lives easier.

Why LPG subsidy is not credited?

Why are you not getting LPG Cylinder Subsidy? If you are not receiving the gas cylinder subsidy, there may be many reasons for it. First, you might not have entered the correct bank account number. You can also find out whether you are receiving the subsidy of LPG or not by logging on to the official website.

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