LPG subsidies cut steeply in FY21, down to nil for many

Not only have taxes on auto fuels been hiked massively over the past year, direct benefit transfers (DBT) of cooking gas subsidies have been reduced to nil for many domestic LPG subscribers not covered by the PM Ujjwala Yojana scheme.

The result has been a steady increase in daily costs for low-and-middle-income Indian households as global oil and gas prices recovered to, and now climb past, pre-pandemic levels.

In March 2020, a 14.2-kg LPG cylinder had cost Rs 825.5 for unsubsidised customers in Chennai; those eligible received DBT subsidies of around Rs 231 per cylinder.

By May 2020, diving oil prices had pulled the price of an unsubsidised cylinder down to around Rs 600, and the government brought standard DBT LPG (DBTL) subsidies to zero—the rationale being that market prices were now at par with the previous subsidised rate.

Now, with oil back above the $70 per barrel mark, the price of an unsubsidised cylinder has recovered to over Rs 800 again. But since no commensurate increase has been made in DBTL rates, the price of a subsidised cylinder has climbed over Rs 800 too.

New Indian Express
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