Increasing LPG cap: brace for higher fuel price too

The government is likely to increase the number of subsidised LPG cylinders per family, but at a price.

According to a report in The Economic Times, the government is weighing various options to make the move revenue neutral.

One of the options on the table is an increase in prices of diesel or LPG.

One of the options on the table is an increase in prices of diesel or LPG. Reuters

A Rs 1 price increase for diesel will help the government garner a revenue of Rs 8,000 crore. In case of LPG, the increase has to be Rs 100, for a similar impact.

Another way the government can make good the losses by supplying diesel at market rates to bulk consumers such as Railways, defence, industries and state road transport undertakings, the report said.

Direct cash transfer should ideally help curb the diversion of LPG and kerosene, which will help the government cut the subsidy burden.

Oil Minister Veerappa Moily had recently announced that the government will increase the number of subsidised LPG cylinders per family to nine a year from the present six.

But the announcement, which came just before the Gujarat polls, had invited the ire of Election Commission, which saw it as a violation of election code of conduct.

The minister later clarified that the government has not yet taken a decision on the LPG cap.

The U-turn had made one thing clear-that the government will raise the cap on LPG cylinders. But with the EC objecting, it is likely to happen after the Gujarat elections.