Cylinder, subsidy give-outs on a downhill since FY20

The amount of money disbursed as LPG subsidy by the Centre has been steadily coming down since 2019-20. According to the Ministry of Petroleum and Natural Gas, only ₹242 crore was transferred as LPG subsidies in FY22 compared to ₹37,209 crore in 2018-19. This was when the maximum number of free cylinders were given under the PM Ujjwala scheme.

In FY20, the number moved lower to ₹24,172 crore with a decline in LPG prices and fewer number of free cylinders given under PM Ujjwala. Subsidies, however, halved in FY21 despite the pandemic relief that was provided in form of free cylinders under the PM Garib Kalyan Yojana. The give-outs dropped further in FY22, standing at just ₹242 crore. This was revealed in a Lok Sabha reply by Rameswar Teli, Minister of State for Petroleum and Natural Gas.

Different subsidies 

The LPG subsidy in the country is under three categories — Direct Benefit Transfer for LPG (DBTL) subsidy, Pradhan Mantri Ujjwala Yojana (PMUY) subsidy and Pradhan Mantri Garib Kalyan Package (PMGKP) subsidy. 

In FY21, DBTL subsidies declined 84 per cent, from ₹22,726 crore to ₹3,658 crore, on the account of the Centre steadily hiking the price on subsidised cylinder in 2019 and 2020. With the crash in international prices of LPG, the price of non-subsidised and subsidised cylinders converged, making the subsidy zero.

When it comes to PMUY — which aims to provide 50 million LPG connections to women from Below Poverty Line (BPL) families — the subsidies came down by almost 75 per cent in FY20 and to ₹76 crore in FY21. In March 2022, Teli told the Parliament that eight crore LPG connections were provided under PMUY on September 7, 2019, seven months ahead of the target date. This could be the reason why the allocation under the PMUY subsidy has come down. The new data shows no money was disbursed under this subsidy in FY22. However, in June 2022, the Centre announced a subsidy of ₹200 per cylinder for PMUY beneficiaries.

When it comes to PMGKP, in April 2020, the Centre kickstarted a scheme to provide free LPG cylinders to PMUY beneficiaries for three months. Data shows in FY21 alone, ₹8,162 crore was spent as subsidies under this scheme. As much as ₹14,073 crore was budgeted for LPG subsidies in the Union Budget for FY22.

How LPG prices rose

As of July 6, 2022, a domestic LPG cylinder costs ₹1,053 in Delhi. Two years ago, on May 1, 2020, the same would cost almost half, ₹581.50 in the same city. Since then, the price of cooking gas has only gone up. LPG prices were hiked six times by ₹50 each since May 1, 2020. The only time it came down in between was when the price was lowered from ₹819 to ₹809 on April 1, 2021.

Published on

July 25, 2022

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