Is LPG subsidy going the way of diesel?
Wealthy consumers who drive expensive SUVs have been drawing the benefit of the diesel that the government subsidises for agriculture.
The case is substantially the same with cooking gas, according to government findings which say that an average Indian family — be it rural or urban — consumes only seven LPG cylinders in a year.
However, petroleum minister Veerappa Moily has still decided to approach the Cabinet with a proposal to give 12 subsidised cylinders per year per family.
Congress vice-president Rahul Gandhi had at a recent meeting of the All-India Congress Committee (AICC) made a strong pitch to raise the quota of subsidised cooking gas cylinders to 12 from nine at present.
Moily admitted on Tuesday that 89.2% of the 150 million LPG consumers use up to nine cylinders in a year; only 10 % buy additional cylinders at market price. If the quota is raised to 12, about 97% of the consumers would no longer need to buy extra cylinders at market rates, he said.
However, increasing the limit to 12 would result in an additional fuel subsidy burden of Rs 3,300 -4,000 crore on the exchequer. The government at present spends about Rs 46,000 crore per annum as LPG subsidy.
“The move to increase the LPG cap to 12 a year will only benefit that class of consumers who can actually afford to pay the market price,” a senior oil company official said.