In marginal relief to consumers, the government today abolished import and excise duties on LPG cylinders they buy beyond the 6 per annum quota of subsidised cooking gas, and asked state governments to subsidise the requirements of households at their level.
The government had last week restricted supply of subsidised cooking gas to 6 per household in a year. Any requirement beyond this was to be purchased at market price, which currently works out to Rs 895 per 14.2 kg cylinder. After the abolishing of 5 percent customs duty and 8 percent excise duty, the consumer price in Delhi would come to Rs 798.
Subsidised cooking gas (LPG) in Delhi is currently sold at Rs 399 a cylinder. “Since some LPG cylinders will not be subsidised, we have amended the notification for the non-subsidised household LPG cylinders… customs and excise (on them) will be zero”, Chidambaram said.
Non-subsidised commercial LPG cylinders, however, would continue to attract customs duty of 5 percent and excise duty at 8 percent.
Taking a cue from the Congress ruled states which have increased the number of subsidised cylinders to nine per year, the Minister asked other states to follow suit.
“I welcome the decision of certain state governments to subsidise three cylinders per year of LPG in addition to six cylinders for which the subsidy would be borne by the central government…I would commend all state governments to adopt such an approach”, he said.
The Minister also welcomed the decision of the Bihar government to reduce VAT on diesel from 18 percent to 16 percent which would neutralise some of the impact of the Rs 5 price hike announced by the Centre last week.
Earlier this week, the Congress party had asked Chief Ministers of Congress-ruled states to increase the number of subsidised LPG cylinders over and above the six already given by the Centre.
Chidambaram said the state governments collected about Rs 1,12,723 crore from excise, customs and state VATs in the 2011-12 fiscal, while the states got a net of Rs 79,571 crore.”We are paying out a huge subsidy on fuel… Therefore, it is not unreasonable to expect that some part of the burden should be borne by the state government’s too,” Chidambaram said.
“I therefore welcome the decision of certain state governments to subsidise three cylinders per year of LPG in addition to 6 cylinders, of which the subsidy would be borne by the central government,” he added.
Trinamool, the second largest constituent of UPA with 19 MPs, had asked the Centre to raise the cap on supply of subsidised LPG to 24 cylinders a year.The key UPA ally has decided to withdraw support to the UPA government if their demands for roll back of the major reforms decisions taken by the Central government were not met.
Taking some bold decisions, the government has hiked diesel price by Rs 5 a litre and allowed foreign investment in multi-brand retail, besides capping the number of subsidised cylinders at 6 per year per family.
The government has pegged its outgo on food, fuel and fertiliser subsidies in the 2012-13 fiscal at over Rs 1.79 lakh crore. Of this, oil subsidy was pegged was Rs 43,580 crore.