Gas subsidy capped at Rs 20 per kg - Fusion - WeRIndia

The Union government has decided to get back to offering subsidy on cooking gas through direct cash transfers that would go straight into consumers’ bank accounts, preventing pilferage.

The Modi government has frozen the budget subsidy for cooking gas at Rs. 20 a kg. It does not indicate that there will be a rise in the prices right away. But if international prices shoot up as they do in the winter, the government will have to either pass on the rise in prices to the consumers or to the oil companies.

The Cabinet has decided to shift to a fixed budget subsidy for cooking gas, which has been frozen at Rs. 20 per kg, according to the Union Oil Minister, Dharmendra Pradhan.

To make them accessible to poorer sections, the government has decided to make the cooking gas subsidised cylinders reasonably priced through 5-kg bottles.

Any users of small cylinders, such as migrants, students and labourers are expected to benefit from it. Currently, 5-kg cylinders are not subsidised, and the standard subsidised cylinders are 14.2 kg in size.

It will help to ensure that the subsidy bill will dip by about 15 per cent over time. Moreover, the decision to shift to a per-kg subsidy norm will also introduce transparency and predictability to the calculation of the fuel subsidy element of the fiscal deficit.

Currently, the difference between the market price and the subsidised price of cooking gas has always been borne by the budget and the state-owned oil companies.

What percentage of the gas subsidy was billed to the budget and what percentage by the oil companies were a matter of negotiation between the Finance and Oil Ministry.

The budget subsidy of Rs. 20 a kg will be maintained till the end of March. After that, the subsidy will be reviewed on the basis of the market prices.

According to a note approved by the Cabinet, against the market price in Delhi for a 14.2-kg cylinder of Rs. 810, the subsidised price is Rs. 417.

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