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LATEST NEWS UPDATES | Govt decides to raise LPG cap after Rahul cue

Govt decides to raise LPG cap after Rahul cue

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published Published on Jan 18, 2014   modified Modified on Jan 18, 2014
-The Times of India


NEW DELHI: The government on Friday decided to raise the annual cap on the number of subsidized cylinders per household to 12 from nine after Congress vice-president Rahul Gandhi gave a cue at the AICC session, saying the present ceiling was inadequate for households.

Confirming that the cap would be raised, oil minister M Veerappa Moily told reporters that a proposal would be taken to the Cabinet shortly. Ministry officials said the issue could be decided by the Cabinet's panel on either economy or political affairs.

Addressing the AICC session, Rahul said nine subsidized cylinders in a year were not enough and there was a need to increase this to 12 cylinders. The Congress vice-president was giving voice to the growing demand within the party.

Indeed, pressure has been building up on Moily, who was opposed to raising the cap on the ground it would bring back large-scale diversion. Finance minister P Chidambaram flagged the issue on January 3 at Thiruvananthapuram, saying the demand was coming from several chief ministers.

As TOI reported on January 11, even Moily changed his tune after Congress MPs Sanjay Nirupam, P C Chacko and Mahabal Mishra met him with a petition on January 10. The oil minister said he would consult Chidambaram and move the Cabinet's panel on political affairs on the issue.

The oil ministry reckons 89% of the 15 crore LPG consumers use up to nine cylinders in a year and only 10% have to buy the additional requirement at market rate. About 69.5% of consumers use only six cylinders a year. If the quota is raised to 12, about 97% of consumers would get cheap gas.

State-run fuel retailers lose Rs 762.70 on each subsidized cylinder and the government would have to pay higher subsidy if the quota is raised. Increasing the limit to 12 would raise the government's fuel subsidy burden by Rs 3,300 crore to Rs 5,800 crore.

The government had in September 2012 capped the supply of subsidized cylinders to six per household in a year. This was raised to nine refills in January 2013. A subsidized cylinder costs Rs 414 against the market rate of Rs 1,258, which goes up and down in tune with global prices.


The Times of India, 18 January, 2014, http://timesofindia.indiatimes.com/india/Govt-decides-to-raise-LPG-cap-after-Rahul-cue/articleshow/28975267.cms


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