Govt slashes subsidised LPG cylinders under Ujjwala scheme to 4 a year

The Centre on Monday reduced the number of subsidised cooking gas cylinders available annually to beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY) from nine to four aligning the support with average household consumption levels, a senior government official said.

Under the flagship scheme launched in May 2016, beneficiaries were initially entitled to 12 subsidised 14.2-kg LPG cylinders every year. The quota was reduced to nine cylinders last year and has now been cut further to four.

At a media briefing, Praveen Mal Khanooja, additional secretary in the ministry of Petroleum & Natural Gas, said the revised entitlement broadly reflects the average annual consumption of Ujjwala beneficiaries, reported news agency PTI.

To promote cleaner cooking fuel and improve affordability, the government introduced a targeted subsidy of Rs 200 per 14.2-kg LPG cylinder in May 2022, credited directly to beneficiaries' bank accounts after every refill purchase. The subsidy was increased to Rs 300 per cylinder in October 2023, with proportionate benefits extended to 5-kg cylinders.

The latest reduction in the subsidised quota comes amid repeated increases in LPG prices. The retail price of a 14.2-kg LPG cylinder in Delhi has risen by a cumulative Rs 89 in two hikes over the past three months, including the latest increase on June 7, taking the price to Rs 942 per cylinder. After adjusting for the Rs 300 subsidy, PMUY beneficiaries pay Rs 642.

Khanooja said the revised entitlement broadly matches average consumption patterns among PMUY households.

According to him, beneficiaries effectively receive support of around Rs 1,000 per cylinder when compared with the government's estimated supply cost of about Rs 1,600 per cylinder.

Cooking gas prices were increased by Rs 29 per cylinder on June 7.

"The increase comes to Re 1 per day," he said, adding that for a family of five, the increase works out to around 20 paise per day.

Khanooja said Indian households continue to pay among the lowest cooking gas prices globally despite a sharp rise in international LPG prices following disruptions in Middle East.

He said the cost of supplying a domestic LPG cylinder has risen to more than Rs 1,600 due to a surge in global LPG prices after the outbreak of the Middle East conflict at the end of February.

India's LPG import costs are linked to the Saudi Contract Price (CP), the global benchmark for the fuel. The benchmark has risen about 46% since February as disruptions around the Strait of Hormuz tightened supplies from the Gulf region.

The government has provided Rs 52,000 crore in LPG subsidies since 2022, he said.

Despite the recent price hikes, oil marketing companies continue to incur losses of around Rs 700 on every 14.2-kg LPG cylinder sold, Khanooja noted.

He added that oil companies are also selling petrol and diesel below cost. The under-recovery on petrol stands at Rs 6 per litre, while diesel under-recovery is about Rs 30 per litre.

"Cumulatively, the oil companies are losing Rs 600-700 crore," he said, explaining the rationale behind the price increases.

Apart from LPG, oil companies have raised petrol and diesel prices by about Rs 7.50 per litre each in four instalments last month. CNG prices have also been increased by Rs 6 per kg.


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