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Govt cushions impact of subsidy waiver of LPG

-The Times of India

In a relief to consumers, the home minister P Chidambaram on Friday announced abolishment the import and excise duties on non-subsidized domestic LPG cylinders, bringing down their price by Rs 97 a unit in Delhi. It also asked states to subsidize LPG cylinders.

The government had last week restricted supply of subsidized cooking gas to six per household in a year. Any requirement beyond this was to be purchased at the market price, which currently works out to Rs 895 per 14.2 kg cylinder.

After the abolition of the 5% customs duty and 8% excise duty, the consumer price in Delhi would come to Rs 798. Subsidized cooking gas in Delhi is currently sold at Rs 399 a cylinder.

"Since some LPG cylinders will not be subsidized, we have amended the notification for the non-subsidized household LPG cylinders... customs and excise (on them) will be zero," Chidambaram told reporters.

Non-subsidized commercial LPG cylinders, however, would continue to attract a customs duty of 5% and excise duty of 8%.

Taking a cue from Congress-ruled states, which have increased the number of subsidized cylinders to nine per year, the minister asked other states to follow suit. "I welcome the decision of certain state governments to subsidize three LPG cylinders per year in addition to the six cylinders for which the subsidy would be borne by the central government... I would commend all state governments to adopt such an approach," he said.

The minister also welcomed the decision of the Bihar government to reduce VAT on diesel from 18% to 16%, which would cushion some of the impact of the Rs 5 price hike announced by the Centre last week.