LPG price hiked by Rs 144.5 per cylinder, subsidy also almost doubled

The government almost doubled the subsidy it provides on the fuel to keep per cylinder outgo almost unchanged

In the steepest hike since 2014, the state-owned oil marketing companies on Wednesday raised the price of non-subsidised 14.2 KG cooking gas cylinder by Rs 144.50 per cylinder to Rs 861.50 in Bangalore, Rs 858.50 in Delhi and Rs a sharp Rs 881 in Chennai.

However, to insulate the domestic consumers, the Centre almost doubled the subsidy amount per cylinder to Rs 291 per cylinder from the earlier Rs 153 per refill.

The government subsidises 12 cylinders for each household per year by providing a direct subsidy.

This is the sharpest upward revision in cooking gas prices since January 2014, when they were increased by Rs 220 per cylinder, which came a day after the parliament's budget session came to a halt.

According to industry sources, the hike of such magnitude needed permission from the government.

“Ideally, the hike would have been announced on February 1 itself since the LPG price revision is done on the first of every month but the approval took some time,” an industry source said.

The government has allocated Rs 38,568 crore for fuel subsidy this financial year in the revised estimate that was announced in the budget for 2020-21.

The price of LPG cylinders is determined based on the international benchmark rate of LPG and the exchange rate of the rupee versus the US dollar.