Government Cuts LPG Gas Cylinder Price By Rs 200 To Ease Price Pressures

In a move to ease inflationary pressures, the Indian government has decided to cut the price of a 14 kg LPG cylinder by Rs 200 on August 29. With this, the government aims to control the rising cost of living in the country ahead of both state and national level elections.

The price of LPG cylinders will be cut for the consumers and state-owned oil marketing companies such as Indian Oil Corporation, Hindustan Petroleum Corporation Ltd, and Bharat Petroleum Corporation Ltd. The companies will be compensated for charging less through a government subsidy, according to a report by CNBC-TV18.

India's LPG retailers will get compensated by the government for cutting LPG prices by Rs 200 for each cylinder. Currently, a domestic LPG cylinder costs Rs 1053 in Delhi, Rs 1052.50 in Mumbai, Rs 1068.50 in Chennai and Rs 1079 in Kolkata. The oil marketing companies had increased the price of domestic LPG cylinder by Rs 50 in July. Earlier, the prices were increased twice in May.

Earlier, CNBC-TV18 had reported that the government of India is planning fresh measures to win confidence of voters before the elections. The cut in LPG prices may help in easing the household expenses. Inflation in India had hit a 15-month high of 7.44 percent in July 2023, largely due to a spike in food prices.

However, Vinay Jaising of JM Financial Services believes there's more to this cut in LPG prices than sheer politics. "If you look at it over a year, oil prices have actually moved down from $100 per barrel to $80 per barrel. And we are consuming about 50 percent of our net imports from Russia, which is probably at $70-75. So I think the OMCs are or have made in the last quarter or two disproportionate amount of marketing margins," he said in a conversation with CNBC-TV18. "I will not be surprised if they cut petrol and diesel prices, as far as the excise duty is concerned as well. I don't think this is to be linked to politics," he added.

LPG was the primary source of energy for 49.4 percent of households in rural areas and 89 percent of urban households across India, according to a recent National Sample Survey Office (NSSO) report. Delhi, Goa, Karnataka, Telangana and Sikkim were among the states where over 90 percent of the household were using clean energy for cooking.

The cut in LPG prices is applicable for those who have access to the Pradhan Mantri Ujjwala Yojana (PMUY), which was launched in 2016. In the recently concluded monsoon session of Parliament, the government said there were 9.59 crore beneficiaries of PM Ujjwala Yojana as on July 1, 2023.