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Resource centre on India's rural distress
 
 

Cheap LPG set for Rs. 10 monthly hike after budget -Anupama Airy

-The Hindustan Times


The government\'s first budget is likely to signal the new administration\'s intention of reforming India\'s fuel pricing regime with monthly hikes of Rs. 10 per cylinder of cooking gas (LPG).

Each household will, however, continue to be entitled to 12 subsidised cylinders a year. Currently, a subsidised LPG cylinder costs Rs. 414 in Delhi while the market price - which consumers pay for any demand beyond the quota - is Rs. 905.

If implemented, the Rs. 10 monthly hike will slash Rs. 7,000 crore from India\'s mounting fuel subsidy bill.

Fuel subsidies could exceed 1.40 lakh crore this year, following soaring crude oil prices due to the current crisis in Iraq.

The move is modeled on the 50 paise a litre monthly hike in diesel prices introduced in January 2013 and will incrementally move cooking gas prices towards market rates while sparing the consumer large shocks.

"With global crude oil prices touching a nine-month high of $115 a barrel, the government may be forced take some tough decisions ahead," a senior official in the Prime Minister\'s Office (PMO) told HT when asked about the LPG price hike proposal.

The proposal is based on recommendations made by the Petroleum Planning and Analysis Cell (PPAC)-the petroleum ministry\'s technical and advisory wing-to the Union petroleum minister Dharmendra Pradhan recently.

In January this year, the UPA government had increased the number of subsidised LPG cylinders from nine to 12 a year per family, giving in to the growing demand of an inflation-hit public and political parties alike.

It had first capped the quota of subsidised cylinders to six a year for each family in September 2012 and raised it to nine a year later in January 2013.