4 months after fixing LPG cylinder cap at 6, govt raises it to 9

Oil companies allowed to raise diesel prices by a small quantum periodically; from April 1, households entitled to nine cylinders per annum; no change in LPG, kerosene rates

GN Bureau | January 17, 2013


Consumers to get five subsidised cylinders between September 2012 and March 2013; nine cylinders from next fiscal.
Consumers to get five subsidised cylinders between September 2012 and March 2013; nine cylinders from next fiscal.

With assembly elections in several states around the corner and the general elections due next year, the UPA government seems to have succumbed to populist measures. On Thursday, the government took a decision to increase the cap of subsidised LPG cylinder from six to nine.

The revision will come into effect from April 1.

"I am happy to inform that the cabinet committee on political affairs has decided to raise the cap on subsidised LPG to nine cylinders per household in a year from existing six cylinders," oil minister M Veerappa Moily told the media.

But there will be no change in LPG and kerosene rates, he added.

Consumers will get a quota of five subsidised cylinders between September 2012 and March 2013 and from April 1, 2013, they will be entitled to nine cylinders per annum, the PTI reports.

The CCPA had on September 13, 2012 decided to limit the number of subsidised cylinders per household at an annual six. On September 17, Sheila Dikshit’s Delhi government raised the cap from six to nine.

On Thursday, Moily said oil companies have been permitted to raise diesel prices by a small quantum periodically till such time that they are able to cover Rs 9.60 per litre loss they incur on the fuel.

Refusing to provide details of diesel price increase, Moily said the raise may take place as early as Thursday night.

The question, though, is why was the cap put on in the first place if it was to be lifted later? Upcoming elections in as many as 10 states between now and the general elections next year is being seen as the answer. Having burnt its hands in Gujarat, and nearly its fingers in Himachal Pradesh assembly elections, with the LPG subsidy issue seen as having had the potential to upset Virbhadra Singh’s applecart in the hill state, the Congress seems game to marry off Manmohanics with populism ahead of its chintan shivir in Jaipur.

Meanwhile, the cabinet committee on economic affairs (CCEA) approved using proceeds from the stake sale of public sector units to recapitalise public sector banks and insurance companies, besides subscribing to shares of public sector companies to retain a 51-percent stake.

The CCEA also allowed export of processed products — among them wheat or meslin flour, cereal flour, cereal groats, meal pellets, milk products, peanut butter and value-added products of onion. Since these products constitute a small portion of India’s overall exports, their continued export will not affect availability in the domestic market and encourage investment in the processed food sector and cold chain infrastructure in the country, says a report on livemint.com.

 

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