Ujjwala subsidies may shine bright in next fiscal year as well

About 100 million beneficiaries of the Pradhan Mantri Ujjwala Yojana get a subsidy of  ₹300 per LPG cylinder. (Photo: PTI)
About 100 million beneficiaries of the Pradhan Mantri Ujjwala Yojana get a subsidy of 300 per LPG cylinder. (Photo: PTI)

Summary

  • The petroleum and natural gas ministry is set to suggest the extension of the cooking gas subsidies to the finance ministry for the upcoming Union budget

New Delhi: The Union government may extend cooking gas subsidies provided under a flagship government scheme for another year, two people aware of the matter said. Currently, about 100 million beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY) get a subsidy of 300 per LPG cylinder, which is scheduled to end in March this year.

“An extension in the subsidy for the next fiscal is likely to be sought. The outgo will be in the range of 10,000-12,000 crore," one of the two people mentioned above said, adding the petroleum and natural gas ministry is set to suggest the extension to the finance ministry for the upcoming Union budget.

Queries sent to the spokespeople of the petroleum and finance ministries remained unanswered till press time.

On 4 October, the subsidy was increased from 200 to 300 per cylinder for up to 12 cylinders annually. A price cut of 200 per cylinder was also announced earlier on 30 August. In the national capital, PMUY beneficiaries now pay 603 per (domestic) cylinder of cooking gas, while others pay 903.

PMUY was rolled out in 2016 to provide cleaner cooking fuel to poor households. The beneficiaries were identified through the socio-economic caste census (SECC) list or from seven other identified categories such as scheduled caste households, scheduled tribe households, most backward classes and beneficiaries of PM Awas Yojana (Gramin).

In September, the government announced a 1,650-crore additional outlay for providing 7.5 million additional free cooking gas connections over three years from FY24 to FY26.

To a large extent, state-run oil marketing companies (OMCs) have absorbed the impact of high prices without fully passing them on to consumers. In October 2022, the government announced a one-time 22,000-crore compensation to state-run fuel retailers to offset their losses from selling domestic cooking gas below cost.

While domestic LPG cylinders saw the last price cut on 30 August, the price of the 19-kg commercial LPG cylinder continues to be revised. On 22 December, OMCs cut commercial LPG cylinder price by 39.5, following up with a 1.50 cut on 1 January 2024. A 19-kg commercial LPG cylinder now costs 1,755.5 in Delhi.

With the general election due in a few months, the government has made several other announcements, too, aimed at providing relief to the common man. For example, with effect from 1 January, the government has extended its flagship free-foodgrain scheme—Pradhan Mantri Garib Kalyan Anna Yojana—for 800 million poor people for another five years.

The last price cut in domestic LPG cylinders, which happened on 30 August, came ahead of key state elections, in the backdrop of inflationary concerns. Retail inflation measured by the consumer price index or CPI rose from 4.87% in October to 5.5% in November.

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