MPs ask for cap on LPG subsidy

Restricting the supply of subsidised cooking fuel may no longer be a politically difficult task, with a Parliamentary panel asking the government to do away with the sale of subsidised domestic LPG to people with more than Rs 6 lakh annual income. If the recommendation goes through, those with income over the specified level will have to pay Rs 642.35 for a 14.2-kg cylinder, as against the current price of Rs 395.35 (in Delhi).

The committee, comprising 21 Lok Sabha and 10 Rajya Sabha members and headed by Congress leader Aruna Kumar Vundavalli, wants no subsidy for even members of Parliament and state assemblies. The government recently started working on the recommendation of a task force headed by Nandan Nilekani that suggested all cylinders be bought at the market price and the government pay a fixed cash subsidy directly to customers.

The report, however, did not talk of taking any section of the population out of the subsidy net. Restricting subsidy is, in fact, considered a political hot potato. But, now with the panel recommending it, the government’s task would become easier.

The standing committee on petroleum and natural gas made the recommendation in view of the huge losses incurred on LPG sales by government-owned oil marketing companies Indian Oil, Bharat Petroleum and Hindustan Petroleum. These companies currently incur a loss of Rs 247 on every cylinder and the combined loss on LPG sales for the current financial year is estimated at Rs 24,900 crore.

The report tabled in Parliament on Wednesday said the panel was of the “firm opinion that such an initiative by the government would help expand subsidised LPG distribution to the rural people, who are more in need of this clean fuel”.

It sought concrete action in the next three months. Reacting to the report, a senior Indian Oil executive said, “Oil companies should not be burdened with any under-recovery from the sale of a subsidised product, be it diesel, LPG or kerosene.

Whether it is reimbursed to us from Budgetary support or passed on to the consumers is something for the government to decide. However, those who do not deserve the subsidy should not get it.” 

Finance Minister Pranab Mukherjee had said on Sunday the government was keen to deregulate LPG and diesel prices. In June last year, the government had decontrolled petrol prices.