Domestic LPG price hiked by Rs 25 per cylinder, to cost Rs 819 in New Delhi

The Centre had stopped offering financial support to consumers in the form of a direct benefit transfer (cash transfer to bank account of beneficiary) of LPG subsidy
The price of a domestic cooking gas (LPG or Liquefied Petroleum Gas) cylinder has been hiked by Rs 25 a piece from Monday. After the price revision, a 14.2 kilogram (kg) domestic LPG cylinder would cost Rs 819 in New Delhi. The price of commercial LPG cylinders of 19 kg was hiked by Rs 95 a piece to Rs 1,614 a cylinder. The prices were hiked similarly across the country.

Currently, there is no subsidy available on cooking gas. LPG prices are generally revised at the beginning of every month. But they were hiked thrice in February 2021. Domestic LPG cylinder price was hiked from Rs 694 a cylinder in January 2021 to Rs 719 a cylinder on February 4. The price was once again hiked by Rs 50 to Rs 769 a cylinder on February 15 in the national capital. A third price hike of Rs 25 per cylinder was done on February 25.

After the latest revision, a domestic LPG cylinder is now Rs 125 more expensive than a month ago. According to officials in the know, all consumers will have to bear the burden of these hikes with nil subsidy being borne by the Centre at the current price.

The Centre had stopped offering financial support to consumers in the form of a direct benefit transfer (cash transfer to bank account of beneficiary) of LPG subsidy. It started eliminating LPG subsidy from around June 2020 onwards through small but sustained hikes in the price of subsidised domestic cylinders. After the LPG subsidy was pruned, the oil marketing companies also reduced LPG prices and then kept it unchanged at Rs 594 a cylinder from July to November-end 2020.

Currently, there is partial support for consumers in far flung areas as the government continues to bear a portion of the additional freight costs. But it continues to subsidise freight charges for consumers located in remote locations (usually away from LPG depots). This freight subsidy varies around Rs 30 a cylinder.

This approach results in significant subsidy saving for the Centre. Allocation for petroleum (LPG and kerosene) subsidy being reduced from Rs 40,915 crore in 2020-2021 to Rs 12,995 crore in 2021-2022. 

There is nil allocation for kerosene subsidy announced in the Union Budget 2021-2022. It is expected that most of the petroleum subsidy allocation will be directed to offering deposit free connections to 10 million new Pradhan Mantri Ujjwala Yojana (PMUY) recipients. This will add to the 80 million existing PMUY consumers in the country who were given an upfront interest-free loan of around Rs 1,600 a connection, but were then buying cylinders at market price. During the COVID-19 pandemic lockdowns, the Centre also offered three completely free LPG cylinders to PMUY beneficiaries.

Now with the rise in LPG prices, the centre’s push to adopt cleaner LPG is facing pressures as PMUY consumers are citing unaffordability of cylinders. The domestic LPG cylinder prices have been rising since December 2020 from Rs 594 apiece on November 1. These prices were kept unchanged from July 1, 2020.

Price of 14.2 kg domestic LPG cylinders

Month Delhi
Mumbai Chennai
1 Mar 21
845 819 835
25 Feb 21
794 810
15 Feb 21
769 785
4 Feb 21
719 745.5 719 735
1 Jan 21
694 720.5 694 710
15 Dec 20
694 720.5 694
1 Dec 20
644 670.5 644 660
1 Nov 20
594 620.5 594 610
Source: IndianOil 

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