Is LPG subsidy removed?

For quite a long time, our maid was asking us- is gas subsidy stopped or not, and, to be honest, I had no clue. I discussed this with my husband and got to know that yes, the government has limited the gas subsidy in its budget for the April 2023 - March 2024 fiscal year. Let me share more details about it.

LPG subsidy stopped by government?

The government has limited subsidies on LPG for only 9 crore poor women and other beneficiaries who are getting free connections under the Ujjwala scheme. The remaining consumers, including households, will pay the market price only. 

14.2 kg of LPG costs around Rs 1,003. Now the Pradhan Mantri Ujjwala Yojana beneficiaries will get a Rs 200 subsidy directly in their bank account, and the price for them will be about Rs 803 for the LPG. Since I am from Delhi, this is what I read in a newspaper article about it. 

Why did gas subsidy stopped?

The gas subsidy has been stopped by the government to restrict its expenditure as growth and revenue has been greatly hit by the recessions and economic conditions that happened not only in India after COVID but all around the world.

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Wondering why LPG subsidy stopped by Government? Let me explain this to you. The Indian government has eliminated LPG sponsorships for families in its spending plan for the April 2023-2024 financial year, opposing business sector assumptions for an expansion due to state and general public in 2023-2024. So, if you are wondering is subsidy on LPG stopped, keep reading ahead.

Why subsidy on LPG stopped?

During her presentation of the budget for the 2023-2014 fiscal year on February 1, finance minister Nirmala Sitharaman stated that the effective implementation of the government's Pradhan Mantri Ujjwala Yojana (PMUY) scheme for low-income households has resulted in the installation of 96 million LPG connections in the nation since its adoption in 2014. 

By covering the cost of the equipment, the program encourages poorer rural homes to switch to LPG for cooking with solid biomass fuels. This is one of the reasons why gas subsidy stopped.

I will tell you the two major reasons why gas subsidy is stopped.

• With nearly every low-income rural household now connected to LPG, the success of the PMUY program is likely to have resulted in demand saturation, which may have led to the elimination of the subsidy.

• Market expectations that the government would extend its Rs. 200 ($2.50) subsidy for a 14.2kg cylinder announced in May 2022 for another year due to important state elections this year and a general election in 2024 were misplaced when the subsidy was removed. To help the PMUY beneficiaries cope with rising gas costs, the government offered a subsidy of Rs200 per cylinder for up to 12 cylinders.

Yet, the public authority multiplied the LPG endowment for India's upper east district to Rs16.33bn from the 2022-23 monetary year. The region has the lowest LPG coverage in India to date, which is why the subsidy has gone up so much. 

• Another reason for the higher subsidy could be the upcoming state elections in March in Meghalaya, Nagaland, and Tripura, as well as later this year in Mizoram, Sikkim, and Arunachal Pradesh.

Is subsidy on LPG withdrawn?

Yes, it is. The state-controlled refiner IOC disclosed to Argus last month that India's LPG consumption would increase by 1.5-2 per cent in 2023. Similar forecasts from Indian firms Antique Broking, Crisil, and Icra supported this. That is why this step has been taken.

I hope now you understand why LPG subsidy stopped.

My family was a little unsatisfied with the government’s decision. Because only a small number of people may receive LPG subsidies, all other customers must pay the market rate. I know that there is no longer a subsidy for cooking gas from June 2020. So let’s study if the LPG subsidy stopped.

Is LPG subsidy stopped?

Only some people are eligible for the LPG subsidy on cooking gas. It includes nine crore poor women and other people who received free connections through the Pradhan Mantri Ujjwala Yojana. LPG consumers have not received any subsidies since the beginning of covid. Only the current subsidy for Ujjwala beneficiaries has been offered since then. The Pradhan Mantri Ujjwala Yojana will provide nearly nine crore beneficiaries with a subsidy of Rs 200 for each gas cylinder up to 12 cylinders. It is the statement of the finance minister Nirmala Sitharaman. So now you know is LPG subsidy removed.

What amount of subsidy will you receive?

All LPG customers, even Ujjwala Yojana recipients, purchased LPG cylinders at market prices after the subsidy was removed in June 2020. At current market rates in the country, a 14.2 kilogramme LPG cylinder costs Rs 1,003. Pradhan Mantri Ujjwala Yojana recipients would now receive a subsidy of Rs 200 per cylinder directly paid to their bank accounts. It is as per the most recent government order. So it makes for them to purchase a 14.2 kg cylinder at Rs 803.

What is the PAHAL scheme?

The current government intends to end the subsidy that people receive for Liquefied Petroleum Gas (LPG) or a cooking gas cylinder under the PAHAL programme. According to a senior government official, the difficult economic conditions have caused the government to think about cancelling this subsidy. It is to reduce expenses and control the government budget.

In the Budget for 2022-2023, the centre has set out Rs 800 crore for the PAHAL programme. But, the total budgeted amount for the Pradhan Mantri Ujjwala Yojana is Rs 5,812 crore. It provides free gas cylinders to women who are below the poverty line.

You must have understood if the LPG subsidy stopped or not.