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Govt raises LPG subsidy cap from 6 to 9 cylinders

Source : AGENCIES
Last Updated: Thu, Jan 17, 2013 16:33 hrs
Govt raises LPG cap to 9, allows oil firms to revise diesel prices

New Delhi: Giving minor relief to Indian households, the union cabinet hiked the subsidy on LPG cylinders from six to nine in a year on Thursday.

The move, which is interpreted by many as a populist gesture by the Congress-led United Progressive Alliance (UPA) government which had earlier reduced the subsidy angering consumers at large, would come into effect from April 1.

The decision was approved in a meeting of the Cabinet Committee on Political Affairs (CCPA).

Petroleum and Natural Gas Minister M Veerappa Moily told reporters: "I am happy to inform the Cabinet Committee on Political Affairs has decided to raise the cap on subsidized LPG to nine cylinders per household in a year from existing six cylinders."



He said the oil marketing companies could take decisions on diesel price and change it by a small margin 'from time to time'.

"For now, there is no revision in the prices of diesel. But the companies are authorised to make price revision from time to time," Moily said.

The government has also written to the Election Commission seeking permission to effect the hike in subsidy in view of polls coming up in three states -- Tripura, Meghalaya, Nagaland -- and populist moves can be seen as violation of model code of conduct.

The Election Commission has reportedly permitted the Centre to raise the cap and said the move was not a violation of code.

India's main opposition Bharatiya Janata Party (BJP) criticised the move and called the UPA government's decision to hike the subsidy on LPG cylinders from six to nine as 'drama'.

"It is a 'nautanki' (drama) by the government to raise subsidised LPG cylinder cap from 6 to 9...There is nothing to celebrate about it," BJP spokesperson Prakash Javadekar said while addressing a press conference.

Speaking on the issue of diesel price, he said: "The government has cloaked the diesel shock by leaving it to oil companies to decide. It is an anti-people decision."

"This is escapism. The government has no fixed policy," Javadekar said.

West Bengal Chief Minister Mamata Banerjee's Trinamool Congress (TMC) also slammed the government over the issue as party MP Saugata Roy told IBNS: "It is too little, too late. We had earlier demanded at least a subsidy for 24 cylinders so that the common man is spared from economic burden."

Speaking on the issue of diesel prices, he said: "Throwing open the diesel prices to vagaries of market is not a pro-people action. Deregulation of the prices was wrong in the first place."

He said: "No matter what the government says about deregulation, the oil companies are all public sector undertakings and they cannot hike prices without consulting the government."

Slamming the government, TMC MP Derek O'Brien tweeted: "Raising subsidised LPG cylinder cap from 6 to 9 a year not enough. We've been demanding 18 to 24 cylinders, 1.5 a month for a normal household."

"UPA govt is all gas & gimmicks... like a shop that raises prices 100% & then offers token discounts. Pre-budget price hikes r similar," he said.

The relationship between TMC and the UPA touched its lowest point last year when it withdrew support to the latter over its economic reforms, including FDI in multi-brand retail, hike in diesel price and cap on subsidy in LPG cylinders.

TMC with 19 MPs was UPA's second biggest constituent and the biggest ally of the Congress party which spearheads the government.

'Oil companies have been allowed to make small corrections periodically'

Finance Minister P. Chidambaram on Thursday reiterated Union Petroleum and Natural Gas Minister Dr. M. Veerappa Moily's statement that the oil companies are authorised to make price revisions from time to time.

"I am not adding anything to what Mr. Moily said. The oil companies have been allowed to make small corrections from time to time. That I believe the Petroleum Ministry is allowing the oil companies," Chidambaram told the media here.

"I am not factoring that at the moment. I am proceeding in the basis that the subsidy bill remains the same. When they will make these small corrections, how much I can't say. So, I am not factoring it. But they have been given the freedom to make small corrections, " he added, when asked that will there be any impact on the subsidy amount even if it's a small change in the prices.

Talking to the media here after the meeting on Cabinet Committee on Political Affairs, Dr. Moily said that there is no increase in the prices of Diesel and Kerosene.

Dr. Moily, however, said that the oil companies have been permitted to raise diesel prices by a small quantum periodically till such time that they are able to cover Rs 9.60 per litre loss they incur on the fuel.

Dr. Moily, who refused to provide details of diesel price increase, said the raise may take place as early as tonight.

The government also raised the cap on supply of subsidised LPG cylinders to nine bottles from six per year.

"I am happy to inform the Cabinet Committee on Political Affairs has decided to raise the cap on subsidised LPG to nine cylinders per household in a year from existing six cylinders," Dr. Moily said.

The consumers will get a quota of five subsidised cylinders between September 2012 and March 2013. They will be entitled to nine cylinders per annum from April 1, 2013.

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