Government facing pressure to raise cap on LPG

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New Delhi – After putting on hold the decision to hike the non-subsidised LPG cylinder prices by Rs. 26.50, there are reports that the government is now facing pressure to raise the cap on number of subsidised cylinders for households from the current six to nine.

There is pressure from within the Congress to raise the cap on subsidised cylinders especially during election season as Himachal Pradesh and Gujarat go to polls.

“Yes, there is pressure… Even the All India Congress Committee spokesperson said there should be increase in cap… Many political parties have said, many states have also said, like J&K, that there is a logistical problem…This is a matter, many of the oil agencies will have to consider,” new Oil Minister Veerappa Moily told News channel yesterday.

Moily, however, added that it was up to the oil marketing companies to decide. He said it was all about deregulation and giving more independence to the oil marketing companies.

“That’s for the companies to do it. Not my ministry’s decision. They say there are certain administrative problems and administrative expediency which made them make this decision,” Moily said in Bangalore.

In September, the Manmohan Singh government had announced, as part of its first big reforms push in months, that it was limiting the use of subsidised LPG cylinders at six a year for every household. For anything beyond that the consumer would have to buy cylinders at market or non-subsidised rates.

On Thursday, the government had hiked the cost of non-subsidised cooking gas cylinders by Rs. 26.50, which would have brought the cost of a non-subsidised cylinder to Rs. 922 for a household in Delhi. The same cylinder at a subsidised rate is Rs. 410.42 in Delhi. In Delhi, a non-subsidised LPG cylinder costs Rs. 895.50. The same cylinder subsidised, costs Rs. 410.42. If yesterday’s price hike had been effected the non-subsidised cylinder would have cost Rs. 922 in Delhi.

The announcement of the hike raised more eyebrows than the volte face did. It came just three days before Himachal Pradesh votes for a new government; the Congress needs to wrest that state back from the BJP and LPG is a major poll issue. Then, Diwali, the most important festival in many parts of India, is round the corner. And the crucial Gujarat elections are also weeks away.

Sources say Moily will reportedly look into how more relief can be given to the common man already hit by high inflation and the emotive and politically fraught issue is also expected to be discussed when the Congress’s top leadership meets on November 9 to review the implementation of the party’s manifesto.

Congress spokesperson PC Chacko, said yesterday that the number of subsidised LPG cylinders being reduced was a difficult decision for the government to take, but its hands are tied.

“Reducing the cylinders to six is going to cause problems to the common people, so we increased it to nine. We are in a difficult situation, international prices are going up. This government or any other government has to hike prices…We had to take difficult decisions. If we get a chance to revise this decision we will, today our hands are tied,” he said.

But the BJP said that the government’s decision on hold the price increase of non-subsidised LPG cylinder was a purely political move for the upcoming elections.

“LPG prices are on hold because of the elections… when they come with a new strategy they will increase prices. As they had raised the pricing three days prior to the elections, they had to rethink to not lose in the elections. What they did was not for the people, they have not removed the hike but put it on hold. It is only going to be on hold for 72 hours,” senior BJP leader Arun Jaitley said yesterday.

In Himachal Pradesh, where campaigning ended on Friday and polling will be held on Sunday, the cap on use of subsidised LPG cylinders has become a big issue. A number of regions in the hill state will soon be battling extreme cold in the winter months: At time when people in far flung and ice-capped hilly regions rely primarily on LPG cylinders, not just for cooking, but even to keep warm. Since burning of firewood is not allowed due to environmental concerns, the Centre’s move has been hotly debated. One independent candidate in Shimla has even made it his election symbol. And for the Congress, it has been difficult to ignore.

Within days of the UPA biting the subsidy bullet, Mamata Banerjee’s Trinamool Congress exited the government, plunging it into a minority. Parties like the Samajwadi Party and the Bahujan Samaj Party, which prop the UPA government with external support have also said they are unhappy with the LPG decision. Allies DMK and even Sharad Pawar’s NCP, which supports tough reforms-oriented decisions, have suggested a review of the LPG move.

The Congress has asked its state governments to allow an additional three subsidised cylinders to below-poverty-line households.

Banerjee, who is now playing the Opposition role aggressively, said on Facebook after the hike was announced, “The present UPA government is really becoming irresponsible and intolerable. Even being a minority government, they have been taking all major policy decisions affecting the survival of common people.” She also made it apparent that she was trying to rally political support to protest the latest hike in prices.

 Revised prices were announced in keeping with firming international rates. State-owned oil firms revise rates of non-subsidised LPG on the 1st of every month, as they do for petrol and aviation turbine fuel, or jet fuel, based on the average imported cost and rupee-US dollar rate in the previous month.

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