Home / Politics / Policy /  11 million consumers give up LPG subsidy

New Delhi: The number of consumers who voluntarily gave up cooking gas subsidy in response to the government’s “Giveitup" campaign has touched 11.3 million, or 6.8% of the total 166 million customer base, saving the exchequer over 1,080 crore a year at current prices.

Oil minister Dharmendra Pradhan, who announced the latest figures at a function in the capital, added that consumers who give up the subsidy voluntarily are free to claim the subsidy on the cooking fuel after a year.

Pradhan’s clarification was in response to a question whether those who gave up the subsidy could claim it back in case the cooking fuel becomes costlier due to an increase in the price of crude oil.

He said that fuel retailers now seek a declaration from applicants for new cooking gas connection on their annual income in an effort to limit the subsidy to only those households with an income below 10 lakh a year.

A study by the oil ministry recently showed that of the people who have given up subsidy voluntarily, only 3% had annual income above 10 lakh, implying that people from the middle and lower classes were far more willing to give up the benefit on cooking fuel than the more well off.

The government is set to launch free distribution of cooking gas connections to 50 million poor women over the next three years, starting 1 May.

Cooking gas for household consumption now receives a subsidy of 90 per cylinder, with crude oil at $40 a barrel. The subsidy was much higher when crude oil was more expensive. For example, in February 2014, when crude oil was at $105 a barrel in international markets, there was a subsidy of 656 per LPG cylinder, as per data provided by the Petroleum Planning & Analysis Cell, an arm of the oil ministry.

For the first three quarters of 2015-16, the government and fuel retailers together spent 12,000 crore on cooking gas subsidy. The finance ministry allocated 26,947 crore for subsidising LPG and kerosene in 2016-17.

Prime Minister Narendra Modi launched the “Giveitup" campaign on 27 March last year so that the benefit could be given to the really needy, especially in rural areas, where LPG consumption is way behind the levels in urban areas. The aim is to replace firewood, coal and other cooking material—which lead to health problems, especially among women—with clean fuel.

Gireesh Chandra Prasad
Gireesh has over 22 years of experience in business journalism covering diverse aspects of the economy, including finance, taxation, energy, aviation, corporate and bankruptcy laws, accounting and auditing.
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