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Delhi Govt absorbs LPG shock

The Delhi government decide to offer direct subsidy to oil companies to absorb the LPG price hike in the National Capital.
None | By HT Correspondent, New Delhi
UPDATED ON JUN 06, 2008 12:05 AM IST

In this season of fuel price hike, Delhiites have one reason to cheer. The Delhi government on Thursday decided to offer direct subsidy to oil companies to absorb the LPG price hike in the National Capital. The result: Delhiites will have to shell out only Rs 10 more for the cooking fuel.

The decision came after an emergency meeting on Thursday evening. The state government will have to foot a bill that may easily add up to Rs 165 crore to facilitate the Rs 40 cut in the price of LPG cylinders.

“Delhi government will offer direct subsidies to the oil companies. They will in turn offer the Rs 40 subsidy to distributors. The total amount will be paid by the Delhi government. We will pay Rs 165 crore to Rs 170 crore for subsidising the 4.5 crore LPG cylinders used every year. This is pure subsidy and no VAT is involved,” said Delhi finance minister A.K. Walia told Hindustan Times. He said representatives from Indian Oil and Bharat Petroleum were present in the meeting.

Delhi chief minister Sheila Dikshit said at a press conference that the move to cut the price of domestic LPG cylinders was aimed at offering “relief to the householders of the city”. She said the hike in petrol, diesel and auto LPG was not going to have an effect on public transport fares as buses and the Metro rail ran on CNG and power, respectively.

Earlier in the day, Dikshit said the price cut would be a mix of “subsidy and VAT”. She also assured that this time, around the subsidy would actually be passed on to the end user, unlike last time when the 8.5 per cent cut in VAT saw no effect on the prices of LPG cylinders. This move, however, has no bearing on auto LPG prices. “That is an area we have not studied yet,” said Dikshit. State-run oil firms have hiked the cost of auto LPG to Rs 35.76 per litre from Rs 34.78, an increase of almost a rupee.

When asked what she proposed to do about the price of diesel with truckers’ unions already threatening to go on strike and hamper supplies in the city, Dikshit said: “The truckers and other businesses will be able to handle this hike themselves.”

A day after Prime Minister Manmohan Singh’s message to curb wasteful expenditure, the CM announced a stop on foreign junkets for ministers and government officials.

“We are very serious about controlling our expenses in government expenditures that may be wasteful. No foreign tours are to be taken by any person in this government,” she added.

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