Monthly limit of one subsidized cylinder per household may go2 min read . Updated: 25 Jul 2014, 12:40 AM IST
Move comes before assembly elections in Maharashtra, Haryana, Jammu and Kashmir, Delhi and Jharkhand slated to happen later this year
New Delhi: The National Democratic Alliance (NDA) government plans to do away with the limit of one subsidized cooking gas cylinder per household.
The move comes before assembly elections in Maharashtra, Haryana, Jammu and Kashmir, Delhi and Jharkhand slated to happen later this year.
The issue is expected to be taken up soon by the Cabinet Committee on Political Affairs (CCPA).
To reduce its subsidy bill and cut the fiscal deficit, the previous United Progressive Alliance (UPA) government had restricted the number of subsidized domestic cylinders per household to six every year in September 2012, revising it to nine the following January. The cap was revised in January 2014 to 12 cylinders per annum starting 1 April 2014, before the general election.
The government, however, said a household couldn’t buy more than one subsidized gas cylinder per month.
“The last revision to 12 cylinders done before the general election came with a rider that the LPG (liquified petroleum gas) households can avail only one cylinder per month. This created a problem, as a normal booking cycle is of 21 days. There have been practical difficulties," said a government official requesting anonymity.
There are around 140 million cooking gas customers in the country. While a petroleum ministry spokesman didn’t reply to queries emailed on Monday, the official said, “the proposal is yet to be put up for CCPA’s approval". Oil marketing companies (OMCs) such as Indian Oil Corporation (IOC), Hindustan Petroleum Corporation Ltd (HPCL) and Bharat Petroleum Corporation Ltd (BPCL) ran up a revenue loss of nearly ₹ 1.4 trillion in the last fiscal year because of selling oil products at below production cost.
Of this, ₹ 46,458 crore was on account of selling subsidised domestic cooking gas. The government paid ₹ 499.52 as subsidy for every cooking gas cylinder in 2013-14.
According to the Government’s Vision-2015, the target is to raise India’s LPG population coverage from 50% to 75% including rural areas, too.
The Bharatiya Janata Party (BJP) in its election manifesto, promised to “set up Gas Grids to make gas available to households and industry".
The issue holds importance given the country’s rising energy import bill. India has an energy import bill of around $150 billion, expected to hit $300 billion by 2030. India imports 80% of its crude oil and 25% of its natural gas requirements.
Demand is expected to more than double by 2035, from less than 700 million tonnes of oil equivalent (mtoe) today to around 1,500 mtoe, according to the oil ministry.
“The LPG demand growth is expected to remain high due to increased cap of subsidised cylinders, which tend to encourage the diversion of domestic LPG for Auto-LPG and commercial LPG purposes (where prices are deregulated and almost double that of subsidised domestic LPG)," rating firm Icra Ltd said in a 7 July report.
The government’s plan to do away with the limit of one cooking gas cylinder every month comes in the backdrop of the suspension of direct gas subsidy transfers to bank accounts that are linked to Aadhaar unique identity numbers.
The Supreme Court had said in September that the government can’t make Aadhaar numbers mandatory for people to avail of the benefits of government services and subsidies, including the direct benefit transfer scheme for delivery of subsidized cooking gas.