Across the eastern border: India cuts LPG price with total subsidy now reaching 116bn rupees
Business
South Asian nation imports about 60pc of its liquefied petroleum gas requirement
NEW DELHI (Reuters) – India cut the price of cooking gas [Liquefied Petroleum Gas (LPG)] for households on Tuesday by about 18 per cent to rein in inflation ahead of crucial state and general elections.
The government reduced the price by 200 rupees ($2.42) on a 14.2-kilogramme cooking gas cylinder sold to 330 million households, Information Minister Anurag Thakur told reporters.
The decision will impact about 100 million low-income families who form a key voter base and have felt the pinch of the rise in food prices over the last few months, as India's annual retail inflation hit a 15-month high in July.
Prime Minister Narendra Modi's government has been criticised by the opposition over high inflation and the price of LPG ahead of elections in five states in the coming months and national elections in mid-2024.
"This is a gift to millions of my sisters of the country," Modi said in a statement, adding that his government "will always do everything possible that improves people's quality of life and benefits the poor and middle class."
Read more: Inflation hurting Modi, but still likely to win India's 2024 polls
The government will have to spend an additional 40 billion rupees for the enhanced cooking gas subsidy, in addition to about 76bn rupees it has budgeted for the current fiscal year.
India imports about 60pc of its liquefied petroleum gas requirement, and Thakur said LPG prices globally have surged 303pc since April 2020.
The cut will double the subsidy support provided to the country's 96 million poor under a welfare programme, increasing it to 400 rupees per cylinder as part of the "Ujjwala scheme".
The subsidy extension on cooking gas was one of the key factors that helped Modi win the 2019 general election.
Prices of cooking gas will be reduced to 903 rupees per cylinder for domestic consumers in New Delhi following the cut and to 703 per cylinder for welfare programme beneficiaries. LPG is part of the fuel and light basket, which constitutes nearly 8pc of the retail inflation basket.
The federal cabinet has also approved a plan to provide free cooking gas stove and connection to 7.5 million new beneficiaries under the scheme, Thakur said.
