The Indian Cabinet has approved a subsidy of Rs 200 per domestic LPG cylinder for all users, and an additional subsidy of Rs 200 for Ujjwala scheme beneficiaries, taking the overall subsidy per cylinder to Rs 400. This decision was made ahead of the general elections and announced by Union Minister for Information and Broadcasting Anurag Thakur.
New connections under the subsidy scheme will be completely free, and the government will bear the additional LPG subsidy burden in FY24, pegged at Rs 7,680 crore. This development comes at a time when domestic LPG cylinders are retailing at Rs 1,103 a unit. The subsidy is credited into the bank accounts of eligible beneficiaries after the purchase of cylinders.
This subsidy will benefit a third of total LPG consumers in the country. However, the sharp increase in international prices of LPG due to various geopolitical reasons was discouraging adoption of cooking gas. The subsidy is being enhanced to shield PMUY beneficiaries from high LPG prices.
In March this year, the Cabinet Committee on Economic Affairs had announced a subsidy on domestic LPG for up to 12 refills per year. An expenditure of Rs 6,100 crore was earmarked for financial year 2022-23 and Rs 7,680 crore for 2023-24. Public Sector Oil Marketing Companies namely Indian Oil Corporation Ltd. (IOCL), Bharat Petroleum Corporation Ltd. (BPCL) and Hindustan Petroleum Corporation Ltd. (HPCL) had been providing this subsidy since May 22, 2022.
To make LPG available to the rural and deprived poor households, the Central government launched PMUY in May 2016, to provide deposit-free LPG connections to adult women of poor households. The subsidy under the government’s flagship scheme is credited directly to bank accounts of the eligible beneficiaries.
With Tuesday’s decision, the LPG subsidy allocation for fiscal 2023-24 is expected to be revised upwards.