Government raises cap on subsidised LPG cylinders to 9

The government will raise the cap on supply of subsidised cylinders to households to nine from six, oil minister Veerappa Moily announced just before the Gujarat polls, inviting the ire of the Election Commission, which has sought an explanation.

The government was under pressure from all political parties, including the Congress to ease the hardship of cooking gas customers. Several Congress politicians had complained that voters in their constituencies were angry with the decision taken in September to limit the supply of subsidised gas cylinders to six per household per year.

Moily also said the government was trying to make the change "revenue neutral" implying that the state oil firms may increase prices.

The Election Commission took note of the announcement and issued a stern letter to oil ministry and said if there was a move to increase the supply of subsidised cylinders, it should be stopped as the model code of conduct was in force for the elections in Gujarat that begin this week. Moily had earlier announced that there was no need to wait for polling to be completed.

"The decision will be taken up by the cabinet at the earliest; there is no necessity to wait for elections to get over," he told reporters.

He said two rounds of meetings on the issue had already been held with the finance minister.

ET was the first to report that Moily was keen to increase the cap on subsidised cylinders.

The minister has also stated in Parliament that the government had received several representations against the limit of six cylinder, and was considering them.

Government officials said increasing the number of subsidised cylinders would have fiscal implications, but a small increase in the price of cooking gas would be enough to neutralize the impact.

The government is keen to provide direct cash subsidy to the needy instead of selling cooking gas and kerosene at a loss.

This will reduce subsidies and deter the use of cheap kerosene in adulterating petrol and diesel.

The oil ministry plans to transfer cooking gas subsidy amount directly to bank accounts of consumers without aadhaar numbers starting from Andaman & Nicobar. It is also preparing a draft cabinet note to provide cash subsidy on kerosene across the country by April next year, government officials said.

According to the oil ministry, the proposed scheme would save Rs 7,500 crore in kerosene and Rs 7,200 crore on cooking gas annually. Government and state oil companies pay Rs 36,365 crore subsidy on LPG and Rs 29,386 crore on kerosene annually.

Source: Economic Times