Cabinet cuts LPG price by Rs 200 per cylinder ahead of festive season
The Union Cabinet announced a reduction in the price of LPG for domestic use by Rs 200 per cylinder, providing a major relief to consumers ahead of the festive season.
The price cut will benefit all 33 crore LPG consumers in India, including those who are enrolled in the Pradhan Mantri Ujjwala Yojana (PMUY). With this, the subsidy for PMUY beneficiaries will now be Rs 400 per cylinder.
The price cut was announced by Union Minister Anurag Thakur in a Cabinet briefing on August 29. He said that the reduction was a “Rakshabandhan and Onam gift” to consumers.
Price cut comes at a time when global crude oil prices have been rising, which has led to an increase in the price of LPG. However, the government has been providing subsidies to LPG consumers to offset the impact of rising prices.
Reduction in price is expected to provide some relief to consumers, who are already facing the burden of rising inflation. It is also expected to boost demand for LPG during the festive season.
The government has announced an additional subsidy of Rs 200 per LPG cylinder for all domestic consumers, including those under the Pradhan Mantri Ujjwala Yojana (PMUY). Subsidy will come into effect from today, August 29, 2023. This means that a 14.2 kg LPG cylinder will now cost Rs 800 for non-PMUY beneficiaries and Rs 600 for PMUY beneficiaries.
The government has also approved 75 lakh additional Ujjwala connections, which will take the total number of PMUY beneficiaries to 10.35 crore.
Same as financial implication of the additional subsidy is estimated to be Rs 7,680 crore for the financial year 2023-24.
Thakur denied that the LPG price cut was linked to the upcoming elections. He said that the government would have provided the subsidy even earlier if the elections were the reason. He also pointed out that the government had already compensated consumers for the price hike in April 2022.
The Cabinet also approved the addition of 7.5 million new gas connections under the Pradhan Mantri Ujjwala Yojana (PMUY). The government had been reviewing the amount of money it was losing by providing subsidies for cooking gas, and this decision is likely an attempt to reduce those losses.
Price of LPG has not been reduced in a while, even though the prices of raw materials have decreased recently. The oil marketing companies are expected to make an official announcement on the price cut soon.
The current price of a 14.2-kg LPG cylinder for domestic use in New Delhi is Rs 1,103. The price was last hiked on March 1, 2023, by Rs 50 per cylinder.
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The Union Budget 2023-2024 allocated Rs 30,000 crore in capital support to state-run Oil Marketing Companies (OMCs) to help them meet the financial requirements of the Pradhan Mantri Ujjwala Yojana (PMUY).
The PMUY was launched by Prime Minister Narendra Modi on May 1, 2016, to provide LPG connections to 50 million women of Below Poverty Line (BPL) families. As of March 2023, over 90 million LPG connections have been released under the PMUY.
The capital support from the Union Budget will help OMCs to procure LPG and distribute it to PMUY beneficiaries at a subsidized rate. This will ensure that the beneficiaries continue to benefit from the PMUY even as the prices of LPG rise in the international market.
