Govt hikes diesel price, cuts cooking gas price

Moneycontrol Bureau

The government on Friday cut the price of non-subsidised cooking gas (LPG) by Rs 107 per cylinder, citing a fall in international gas prices. The move came a day after the Cabinet approved increasing the quota of subsidized cylinders for consumers from nine to 12.

The government, however, increased the price of diesel by 50 paise, reiterating its commitment of raising prices every month till losses on selling the fuel were wiped out.

Diesel will now cost Rs 54.91 per litre in Delhi while the 14.2-kg cooking gas cylinder that consumers buy beyond their entitled 12 bottles at subsidised rates, will now cost Rs 1,134, down from Rs 1,241.

The cut in the price of LPG, along with the move to raise the cap of subsidized cylinders, may lead to concerns the move may have political reasoning as the country heads into elections this May and with the ruling UPA government’s prospects appearing dented.

The decision to hike the subsidized cylinder quota came in for questioning even by the Reserve Bank of India Governor Raghuram Rajan who termed it as “misdirected subsidy” while several economists criticized the move as being “populist”.

Also read: Cabinet approves subsidised LPG cap hike to 12 from 9

The government last year introduced the direct subsidy transfer scheme last year wherein it deposited cash directly into consumers’ bank accounts linked to Aadhar, while pricing gas cylinders at full cost.

But the move met with criticism from the Supreme Court, which asked the government not to make Aadhar mandatory in order to obtain subsidy benefits. The government suspended the direct subsidy transfer move yesterday.