Top News

The government has reduced the number of subsidised cooking gas cylinders available each year to beneficiaries of its flagship Pradhan Mantri Ujjwala Yojana (PMUY), bringing the annual entitlement down to four cylinders.

The move marks another reduction in the subsidised quota under the scheme, which was launched in May 2016 to provide deposit-free LPG connections to adult women from economically weaker households. Beneficiaries were initially eligible for subsidy support on 12 cylinders annually. The quota was reduced to nine cylinders last year and has now been cut further.

Announcing the decision at a media briefing on Monday, Praveen Mal Khanooja, Additional Secretary in the Ministry of Petroleum and Natural Gas, said the revised entitlement closely reflects the average annual LPG consumption among Ujjwala households.

Subsidy Linked to Average Household Consumption

The PMUY scheme was introduced to encourage the adoption of cleaner cooking fuel among poor households and reduce dependence on traditional fuels. To make LPG more affordable, the government launched a targeted subsidy programme in May 2022.

Under the initiative, beneficiaries receive a subsidy of Rs 200 on every 14.2-kg LPG cylinder purchased, with the amount transferred directly to their bank accounts. The benefit initially covered up to 12 cylinders each year.

In October 2023, the subsidy was enhanced to Rs 300 per 14.2-kg cylinder. A proportionate subsidy was also extended to smaller 5-kg cylinders, increasing support for eligible households.

LPG Price Hikes Prompt Policy Shift

The latest reduction in subsidised cylinder entitlement comes against the backdrop of rising LPG prices. The retail price of a 14.2-kg domestic LPG cylinder in Delhi has increased by a cumulative Rs 89 through two revisions over the past three months.

The most recent increase, announced on June 7, pushed the retail price to Rs 942 per cylinder. After adjusting for the Rs 300 subsidy, PMUY beneficiaries currently pay Rs 642 for a refill.

Khanooja said the revised quota broadly mirrors actual consumption patterns among Ujjwala beneficiaries. He added that when compared with the government's estimated supply cost of around Rs 1,600 per cylinder, beneficiaries effectively receive support worth nearly Rs 1,000 per cylinder.

Rising Global Costs and Oil Company Losses

Defending the recent LPG price increase of Rs 29 per cylinder, Khanooja said the hike works out to roughly Re 1 per day. For a family of five, he said, the additional burden translates to around 20 paise per person each day.

He also maintained that Indian households continue to pay among the lowest cooking gas prices globally despite a sharp increase in international LPG rates. According to him, supply costs have surged after the outbreak of war in West Asia at the end of February.

India's LPG import prices are linked to the Saudi Contract Price (CP), a global benchmark for the fuel. Khanooja said the benchmark has climbed about 46 per cent since February as disruptions linked to the Strait of Hormuz tightened supplies from Gulf producers.

Government Subsidy Bill Tops Rs 52,000 Crore

The government has spent approximately Rs 52,000 crore on LPG subsidies since 2022, Khanooja said, highlighting the scale of financial support extended to consumers.

Despite recent price revisions, oil marketing companies continue to incur losses on domestic LPG sales. According to the official, companies are losing around Rs 700 on every 14.2-kg cylinder sold.

He further stated that oil firms are also facing under-recoveries on transport fuels. The under-recovery on petrol stands at about Rs 6 per litre, while diesel sales are generating losses of roughly Rs 30 per litre.

"Cumulatively, the oil companies are losing Rs 600-700 crore," he said, citing the financial pressures behind the recent fuel price revisions.

Apart from LPG, oil companies increased petrol and diesel prices by around Rs 7.50 per litre each through four revisions last month. Compressed Natural Gas (CNG) prices have also been raised by Rs 6 per kg.