Meet on cooking gas quota

New Delhi, July 24: Kitchen budgets may feel the squeeze if

a government meeting this week decides to restrict the use of subsidised LPG cylinders to four to six per household every year.

A senior oil ministry official said the proposal to put a cap on subsidised LPG cylinders would be discussed by the empowered group of ministers (eGoM), headed by finance minister Pranab Mukherjee, that is likely to meet this week.

In Calcutta, oil marketing firms suffer a loss of Rs 291.83 by selling a 14.2kg LPG cylinder at Rs 405.

If the proposal is approved by the eGoM, every household will get only four to six cylinders at a subsidised rate. For additional cylinders, consumers will have to pay the market price of about Rs 700 apiece.

“Since a large number of consumers use about six cylinders a year, the restriction may not affect them, but those who consume more will have to pay at the market rate,” officials said.

The cap on LPG cylinders is likely to save the government around Rs 10,000 crore.

The oil ministry has proposed the cap for those who own a car, a two-wheeler, a house or figure in the income tax list.

Analysts said cooking gas was mainly used by the middle and upper classes and hence, there was no need for a phased withdrawal of subsidy by rationing its use.

Even in the case of rationing, the government needs to have a political consensus. It would have to weigh the pros and cons as the Uttar Pradesh Assembly elections are due next year.

Each LPG cylinder normally lasts for 45-60 days. Based on this calculation, a maximum number of six cylinders are considered sufficient for a family in a year.

At present, records of LPG distributors of public sector companies show that a huge number of consumers are using 20-30 cylinders each year, hinting at a large-scale diversion of subsidised cooking gas for commercial use such as in restaurants and for auto fuel. Each 19kg commercial cylinder costs Rs 1,200-1,370.

According to a report of a task force under Unique Identification Authority of India chairman Nandan Nilekani, while imposing a limit on subsidised LPG, “caution has to be taken as there may be a spurt in new connections and old, inactive connections may become active. Rationing itself will reduce the number of subsidised cylinders sold and, therefore, reduce the subsidy bill of the government”.

The task force was set up to suggest ways to plug leakages in the current subsidy framework for kerosene, LPG and fertiliser.