The government on Tuesday announced the price cut, which was implemented by public sector oil marketing companies (OMCs) on Wednesday.
The government stopped providing LPG subsidy in the early months of the 2020-21 fiscal, when global oil and fuel prices had crashed.
The government’s decision to slash domestic cooking gas prices by Rs 200 per 14.2-kg cylinder and expand the Pradhan Mantri Ujjwala Yojana (PMUY) by adding 75 lakh poor households to its beneficiary base could cost upwards of Rs 37,000 crore on an annualised basis, an analysis of liquefied petroleum gas (LPG) consumer base and average gas refill data suggests. For the computations, it is assumed that the LPG cylinder refill rates will stay at the levels recorded for 2022-23 (FY23) and fuel retailers will continue to sell LPG to households at a price that is Rs 200 lower than what they would have charged for a cylinder had the price cut not been announced.
On its part, the government has not provided any estimate of the cost of the twin decisions. Speaking on condition of anonymity, a senior official in the finance ministry said that the actual cost could be somewhat “lower” than this estimate as there are a number of variables in the equation. These include possible over recoveries on LPG sales by fuel retailers, movement in international crude and LPG prices going ahead, and currency fluctuations. The official, however, did not provide any estimation of what the actual cost might be.
The government on Tuesday announced the price cut, which was implemented by public sector oil marketing companies (OMCs) on Wednesday. While the government has so far not officially clarified whether or not it plans to foot the bill for this price reduction, which will benefit over 31 crore domestic LPG consumers in the country, the finance ministry official quoted above said that OMCs will bear the impact of the price cut. The official, however, clarified that the government will cover the Ujjwala subsidy of Rs 200 for the 75 lakh new beneficiaries, as is the case for existing beneficiaries under the scheme. For Ujjwala beneficiaries, the price cut is over and above the subsidy, which implies that they will get a cumulative relief of Rs 400 per cylinder.
Source:indianexpress.com