Steepest rise in LPG price? Yes it is, but you have paid much more for cooking gas earlier

By: |
March 02, 2017 6:33 PM

While the latest hike of Rs 86 takes the price of LPG cylinder to Rs 737.5, it is far below what the price of the non-subsidised domestic cooking was at its peak in January 2014.

lpg cylinder discount, lpg discount, discount on lpg cylinder, lpg cylinder, lpg cylinder on rs 5, discount on lpg onlineThe non-subsidised LPG was being sold for Rs 1,241 per cylinder at its peak, back in January 2014, after which, the prices started falling in line with the price of the crude oil in global markets. (Image: Reuters)

Consumers were hit yesterday with the news of a Rs-86 hike in the price of non-subsidised LPG cylinder, the “steepest” ever increase in the price of domestic cooking gas. But is it really?

Let’s see. After the latest increase, the non-subsidised LPG will cost Rs 737.5 per 14.2 kg cylinder in Delhi. Indeed, the price appears to be high, but consider this: it is still less than two-third of what it was more than three years ago.

The non-subsidised LPG was being sold for Rs 1,241 per cylinder at its peak, back in January 2014, after which, the prices started falling in line with the price of the crude oil in global markets. At the time, there was a cap nine cylinders per year per connection at subsidised prices.

Further, even in the first three months of the year 2015, the first 2.7 lakh people who surrendered their subsidies on LPG cylinders following Prime Minister Narendra Modi’s call paid as much as up to Rs 710 per bottle. Since then, an effective hike of Rs 27.5 in over two years is not steep at all. In fact, if we were to consider inflation, it is effectively lower.

The story began after that, when the list price of the LPG cylinder began dropping steadily over the subsequent one-and-a-half years, falling from Rs 610 in March 2015 to Rs 466.5 in September 2016.

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The prices have again continuously risen since then in seven straight increases. Notably, global crude oil price is at the similar level now at which it was when the LPG price was at this level the last time.

India has about 14 crore LPG connections, out of which 1 crore families had voluntarily given up LPG subsidies by April 2016. This left the government with Rs 5,000 crore in money saved on retail fuel subsidy bill, which was at Rs 40,000 crore in the financial year 2013-14 and Rs 30,000 crore in 2014-15.

 

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