New delhi Sources said that though quantum of increase in price of subsidised cooking gas has not been worked out, it could be in the range of Rs 4-5 per cylinder per month. This is similar to the practice adopted by state-run oil marketing companies (OMCs) in 2016-2017 of regularly increasing the price of a LPG cylinder by Rs 2 initially and Rs 4 later. The practice was phased out in october 2017 over stiff opposition to the move and the understanding that it worked contrary to Ujjwala scheme of providing free cooking gas connections to the poor.
"The need for revising the price of domestic cooking gas is stronger this year than ever before as the subsidy per cylinder has doubled with effect from February. If the current price trend holds in FY21, it could jack up the government's LPG subsidy bill from Rs 35,605 crore estimated in the Budget," said an official source privy to the development.
Every household is entitled to 12 cylinders of 14.2 kg each at subsidised rates in a year. Any requirement beyond that is to be purchased at market price. If the decision to raise subsidised LPG prices is taken, the burden will shift even to the 12 cylinders. The prevailing low demand conditions and resultant low oil prices are expected to act as a cushion to the government from overshooting its oil subsidy bill in FY21. oil is projected to remain in $55-65 band in FY21. This would keep even product prices under check, thereby keeping the subsidy outgo lower. The situation could also mean that LPG prices may fall in coming months. If that happens, the government subsidy per cylinder may once again fall, negating any need for a regular revision in cooking gas prices.