Govt discontinues cooking gas subsidy as oil market turns favorable

Nagpur: The government has completely eliminated the need to provide subsidy on domestic cooking gas as the global fall in oil prices and frequent rise in LPG gas cylinder price has brought the price of the common man’s fuel closer to market rates.

As of September 1, the price of non-subsidised and subsidised 14.2 kg cooking gas is identical at Rs 594 a cylinder. What this means is that government would no longer need to pay subsidy under the direct benefit transfer scheme (DBT) into the account of beneficiaries

In fact, with the price gap between the subsidised and non-subsidised cooking gas narrowing since early this fiscal, the government has not made any cash transfers into the accounts of beneficiaries.

After paying Rs 789.50 for a domestic gas cylinder in Nagpur in April 2020, the beneficiaries received Rs 199 as a grant. In January 2021, one has to pay Rs 746 per cylinder. But only Rs 40 and 10 paise have been deposited in the bank account.

 Normally a customer is provided with 12 cylinders of subsidy in a year. But many people use only seven to eight cylinders a year. The remaining four to five cylinders are black marketed. In Nagpur, the demand for domestic gas cylinders increased by more than ten percent from April 2020 to August 2020. This is because free gas connections given under the Ujjwala scheme.

While global oil markets are largely responsible for the fall in the prices of all petroleum products, but oil companies also raised the price of subsidized cooking gas consistently. Earlier, the beneficiaries used to receive grants of more than Rs 600 but now all they get is from Rs 5 to Rs 100. The rise in global fuel prices has affected this.