Non-subsidised LPG pinches consumers more

The Rs 220-per-cylinder hike comes at a time when UPA is planning to increase cap on subsidized LPG cylinders from nine to 12

The increase in prices of non-subsidised liquefied petroleum gas (LPG) on Wednesday has more than doubled its gap with subsidised cylinders, causing widespread protests across the country.

On Wednesday, the price of non-subsidised cylinders was increased by Rs 220 a unit. The move came at a time when the Congress-led United Progressive Alliance (UPA) was planning to increase the cap on subsidised LPG cylinders from nine to 12.

The annual cap on LPG cylinders was introduced on September 13, 2012, at six. This was increased to nine cylinders on January 17, 2013.

The price of a subsidised cylinders in Delhi now stands at Rs 414 a unit. Following Wednesday’s hike, price of a non-subsidised cylinder zoomed to Rs 1,241 in Delhi from Rs 1,021.

“People who do not deserve subsidy should not get it. Through linking of LPG with Aadhaar, the Centre is making subsidy more direct now,” said Debasish Mishra, senior director (consulting) at Deloitte Touche Tohmatsu India.

Various political parties have reacted sharply to the price revision.

“The tradition is to give some good news to the people on New Year... Giving suffering as New Year bonanza is a betrayal, which has not been committed by any government so far,” Tamil Nadu Chief Minister Jayalalithaa said in an official statement.

The Communist Party of India (Marxist) termed the price hike as “totally unjustified”, saying it would impose intolerable burden on the people already reeling under high prices. The party also demanded immediate stoppage of linking of subsidised gas cylinders with Aadhaar.

Oil marketing companies’ (OMC) under-recoveries, or losses, on domestic LPG stood at Rs 542.71 a cylinder for the second fortnight of December 2013. OMCs were suffering a daily under-recovery of Rs 434 crore on sensitive petroleum products. OMCs reported a total of Rs 60,907 crore as under-recoveries during the first half of FY14 on diesel, kerosene and domestic LPG.