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Cooking gas Liquid Petroleum Gas (LPG) has become more expensive as it now costs Rs 1,053 per cylinder (non-subsidised) in Delhi after a hike of Rs 50 on Wednesday by the state-owned fuel retailers.
The hike, which is the third since May and the fourth this year, comes amid inflation remaining above six per cent –the threshold limit of the Reserve Bank of India (RBI) — since several months, resulting in increased prices of food, fuel and other essential commodities.
The cooking gas cylinder is priced at Rs 1,052.50 per 14.2-kg cylinder in Mumbai, Rs 1,079 in Chennai and Rs 1,068.50 in Kolkata respectively as the rates vary across the states due to differences in the Value Added Tax (VAT).
State-owned refiners have raised the cooking gas prices 13 times since 2021. As per the official data by the Indian Oil Corporation (IOC), the rates of the cooking gas were Rs 694 per cylinder before a hike of Rs 25 on February 4, 2021.
The prices were hiked by Rs 50, Rs 25, Rs 25, Rs 10 and Rs 25.50 on February 15 and 25, March 1 and April 1 respectively last year, bringing the LPG cylinder rate to Rs 834 in June 2021.
The cooking gas cost Rs 899.50 by the end of 2021 after the prices were spiked by Rs 25.50 on July 1, Rs 25 on August 17, Rs 25 on September 1 and Rs 15 on October 6.
The LPG price reached Rs 1,053 after a hike of Rs 50 on March 22, Rs 50 on May 7, Rs 4.50 on May 19 and Rs 50 today.
As India is oil import dependent, the importing cost, according to an official data, of over 16 million tons of the LPG against the consumption of over 27.41 million tons, depends on the global prices, which are benchmarked by the Saudi oil giant Aramco.
The other components to the pricing are the freight cost, customs duties, port dues and the like. The non-stop dollar-rupee dance also makes the domestic market more vulnerable as the international trade takes place in the US dollars.
Currently, it is a double whammy for India as the rupee is trading to its all time low, nearly Rs 80 against the US dollar and international price of the LPG is high with Rs 725 US dollars per metric ton for July. The crude is also selling at soared prices in the global markets with Rs 105.85 US dollars on Wednesday.
The supply chain disruptions, as per the analysts, is due to the ongoing Russia-Ukraine war and heavy sanctions imposed on oil producer Russia by the west are among the main reasons for the spiked prices.
Earlier, the consumers used to buy the LPG at non-subsidised or below-market rates after exhausting their quota of 12 cylinders. But in the mid of 2020, the government stopped paying the subsidy on the LPG and kept it confined to people falling below the Below Poverty Line (BPL) under the Ujjwala scheme.
Over 70 per cent of households are estimated to use the LPG as their primary cooking fuel and 85 percent have LPG connections. Of the 27.76 crore retail consumers, 26.12 crore consumers avail LPG subsidy, as per an official data. The hike in prices impacts household inflation and purchasing power.
The government recently announced a cut of Rs 8 per litre for petrol and Rs 6 for diesel. Over 40 percent fuel inflation and soared prices of crude oil in the international market have kept petrol above Rs 100-mark in most parts of the country for several months before the cut.
The chances of falling prices of the cooking gas are bleak unless the government reduces the taxes or international prices fall. To give respite, the government has so far announced Rs 200 per cylinder subsidy but only for the Ujjwala scheme beneficiaries.
The Russia-Ukraine war, which seems to be unending till some months as there has been no truce between the two sides so far, makes it even more difficult.
