Union Cabinet clears ₹200 gas cylinder subsidy
The decision to bring back the subsidy in cooking gas for all consumers, which was discontinued in 2020, comes ahead of key state elections later this year.
The Union Cabinet chaired by Prime Minister Narendra Modi on Tuesday decided to slash the price of cooking gas by ₹200 per 14.2kg cylinder for around 330 million people, in a move aimed at easing the strain on household finances hit by soaring retail inflation, which came in at a 15-month high of 7.44% in July.
The decision to bring back the subsidy in cooking gas for all consumers, which was discontinued in 2020, comes ahead of key state elections later this year.
The reduction in price is also for the 96 million beneficiaries (these are part of the 330 million) of the Pradhan Mantri Ujjwala Yojana, who will now get a subsidy of ₹400, up from the previous ₹200. The additional subsidy alone is expected to cost the government about ₹24,000 crore, depending on prevailing market rates, an official said requesting anonymity. It isn’t clear how much the overall cut will cost.
The government also announced it would give an additional 7.5 million connections under the Ujjwala scheme.
Cooking gas prices were ₹928.50 for a 14.2kg cylinder in May 2014 (in New Delhi), dipped in 2019, but rose ₹1,103earlier this year. In May 2022, the government announced a ₹200 a cylinder subsidy for beneficiaries of the Ujjwala scheme. That has now been doubled.
Effectively, a cylinder will cost ₹903 to general consumers and ₹703 to beneficiaries of the Ujjwala Yojana from Wednesday, Union Information and broadcasting minister Anurag Thakur told reporters after the Cabinet meeting.
“On the auspicious occasion of Onam and Rakshabandhan, Prime Minister Narendra Modi, as he is known as ‘bhai’( brother) Narendra Modi, has given a gift to the millions and millions of sisters and the users of LPG cylinders,” he said.
Responding to a tweet by oil minister Hardeep Puri that called the Cabinet’s decision “bold”, the Prime Minister replied: “The festival of Rakshabandhan is the day to increase happiness in our family. The reduction in gas prices will enhance convenience for sisters in my family and make their life easier. May every sister of mine be happy, be healthy, this is my wish to God.”
“Thanks Hon’ble PM Shri @narendramodi for giving this ‘Sneha Upahar’ to your sisters and mothers on this occasion,” Union finance minister Nirmala Sitharaman said.
The Opposition, however, called it a political move ahead of crucial assembly elections and the General Elections by May 2024. “A sudden slash in LPG prices by Mr. Modi. Why now, you may ask?... Karnataka rout of the BJP -- the high price of LPG was one of the main issues of the election,” Congress leader Jairam Ramesh said in a tweet.
“Three months before the five state elections, where BJP is staring at certain defeat, and six months before the Lok Sabha elections, the BJP is literally clutching at straws,” he added.
One of the poll promises the Congress party made ahead of the recent Karnataka election, which it won, was a ₹500 reduction in the price of a cylinder of cooking gas. A similar promise is expected in Madhya Pradesh, which is going to the polls later this year, as is Rajasthan, where the ruling Congress already provides a state subsidy for gas.
The government has, however, not disclosed the size of the total LPG subsidy burden and how this will be met. It is expected that state-run fuel retailers will provide cylinders cheaper than the market rate and that the government will compensate them. The government had stopped giving LPG subsidies to general consumers (barring a minor sum as transport subsidy to far flung areas) from June 2020. That has now been restored.
