Government takes back LPG price hike order after 'contrary' signal

New Delhi The government has withdrawn its decision to raise LPG prices by Rs 4 per cylinder every month as the move was seen contrary to its Ujjwala scheme of providing free cooking gas connections to the poor The government had previously ordered public sector oil marketing companies to raise domestic cooking gas LPG prices by Rs 4 per cylinder every month beginning June 2016 with a view to eliminating subsidiesRepresentational pictureThe order was however withdrawn in October a top source said Subsequently Indian Oil Corporation IOC Bharat Petroleum Corporation Ltd BPCL and Hindustan Petroleum Corporation Ltd HPCL have not raised LPG prices from October Previously the oil firms were authorised to increase the price of subsidised domestic LPG cylinder by Rs 2 per 142kg cylinder per month excluding VAT with effect from July 1 2016 Oil companies had hiked LPG rates on 10 occasions since that goahead Every household is entitled to 12 cylinders of 142kg each at subsidised rates in a year Any requirement beyond that is to be purchased at market priceThe quantum of hike was doubled through an order dated May 30 2017 That order authorised the stateowned firms to continue to increase the effective price of subsidised domestic LPG by Rs 4 per cylinder effective June 1 2017 per month excluding VAT till the reduction of government subsidy to nil or March 2018 or further orders whichever is earlierThe source said it was felt that raising prices was giving a contrary signal to users On the one hand the government was pushing for giving free cooking gas connections to the poor but on the other it was raising prices every month To correct this the order was withdrawn he said He also said there have been increase in the price of subsidised LPG even after October mainly because of taxation issues The taxation issue arose after implementation of the direct benefit transfer DBT scheme in which consumers are paid subsidy amount directly in their bank accounts which is supposed to be used to buy marketpriced LPG Before DBT LPG was available at dealers at subsidised price VAT was levied on that subsidised price Now LPG is only available at market price and GST is applicable on that price Besides being higher than the subsidised price the market price fluctuates every month compelling changes in retail prices to account for the taxes he explained Cooking gas LPG price has been hiked by Rs 765 in 19 installments in 17 monthsStateowned oil marketing companies since July last year revise price of LPG on 1st of every month The price of subsidised LPG was last raised by Rs 450 per cylinder on November 1 to Rs 49569 according to a notification issued by stateowned firms A 142kg LPG cylinder was priced at Rs 41918 in June 2016According to the Petroleum Planning and Analysis Cell PPAC of the oil ministry there is a subsidy of Rs 25131 on every 142kg subsidised LPG cylinder Incidentally the nonsubsidised or market priced LPG rates were raised by Rs 5 per cylinder to Rs 747 a bottle on December 1 Nonsubsidised LPG rates have moved in tandem with their cost since December 2013 There are as many as 1811 crore customers of subsidised LPG in the country These include over 3 crore poor women who were given free connections during the last one year under the Pradhan Mantri Ujjwala Yojana There are 266 crore users of nonsubsidised cooking gas including those who gave up subsidy on call by Prime Minister Narendra ModiCatch up on all the latest Mumbai news current affairs from Mumbai local news crime news and breaking headlines hereCatch up on all the latest Mumbai National and International news hereDownload the new midday Android and iOS apps to get updates on all the latest and trending stories on the go