Mint Explainer: Why the government cut LPG prices by ₹200
₹200 on domestic liquified petroleum gas (LPG) cylinders or cooking gas. The move comes in the backdrop of high inflation and also at a time when the government is gearing up for assembly elections in five states as well as general elections next year. Here's a look at the factors behind the decision and its likely impact.
The price cut has been announced in a bid to tame inflation in the country. Retail inflation in July reached 7.44% from 4.87% in June, with consumers facing a sharp 11.5% spike in food prices. This is the fastest pace of retail inflation since April 2022 and the first time since September 2022 that it has scaled 7%.
Inflation in the fuel and light segment increased 3.67% on a year-on-year basis. Further, the decision also comes ahead of key assembly elections in five states and general elections in 2024. Cooking gas is a politically sensitive commodity given its impact on household budgets.
In the national capital, the 14.2-kg domestic LPG cylinder was priced at ₹903 on Wednesday, down from ₹1,103 on Tuesday. Similarly, domestic LPG prices in Kolkata, Mumbai and Chennai stood at ₹929, ₹902.50 and ₹918.50, respectively, after the price cut. The price cut is also applicable for subsidized cylinders under the Pradhan Mantri Ujjwala Yojana (PMUY) scheme.
These cylinders already get a subsidy of ₹200. For beneficiaries of PMUY, the price now is ₹703 in the national capital. Domestic oil marketing companies (OMCs) have been raising prices of LPG, or cooking gas, intermittently, amid a surge in global gas prices after the Ukraine war.
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