Indian Government Cuts LPG Cylinder Price by Rs 200

The move aims to ease pressure from rising cost of living

Introduction

The Indian government has decided to cut the price of a 14 kg LPG cylinder by Rs 200 on Tuesday (August 29). The move is aimed at easing the pressure from rising cost of living due to inflation, ahead of key elections both in the states as well as the Lok Sabha (lower house of the Indian Parliament) next year.

Compensation for Oil Marketing Companies

• The price of the LPG cylinders will be cut for consumers
• Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Limited (HPCL), and Bharat Petroleum Corporation Limited (BPCL) – all three owned by the state – will be compensated for charging less via a government subsidy

Current LPG Cylinder Prices

• Delhi: Rs 1053
• Mumbai: Rs 1052.50
• Chennai: Rs 1068.50
• Kolkata: Rs 1079

Impact on Elections and Inflation

The move comes ahead of Assembly polls in five states – Rajasthan, Chhattisgarh, Madhya Pradesh, Telangana, and Mizoram – scheduled for later this year. The Narendra Modi administration’s current five-year term at the center too comes to an end next year.

Inflation in India hit a 15-month high of 7.44 percent in July 2023, largely due to a spike in food prices.

Cut in LPG Prices – Politics or Economics?

Vinay Jaising of JM Financial Services believes there’s more to this cut in LPG prices than sheer politics. According to him, the oil prices have actually decreased over the year, and the oil marketing companies have earned disproportionate marketing margins in the past quarter or two.

Importance of LPG in India

LPG is the primary source of energy for a significant percentage of households across India, both rural and urban. A recent National Sample Survey Office (NSSO) report stated that LPG was used by 49.4 percent of rural households and 89 percent of urban households for cooking.

Pradhan Mantri Ujjwala Yojana

Pradhan Mantri Ujjwala Yojana is a flagship scheme launched by the government to provide LPG connections to below poverty line (BPL) families. The scheme aims to provide 5 crore LPG connections with a support of Rs 1,600 per connection in the next three years. The scheme has been expanded to include migrant families as well.

How to Apply for Pradhan Mantri Ujjwala Yojana?

• Women who are 18 years or older, without an existing LPG connection, can apply for the Ujjwala subsidy
• Documents required: Aadhaar Card, proof of address, ration card, and family composition document
• Migrant workers can provide a self-declaration
• Bank account number and IFSC code are required