The Manmohan Singh government indicated on Tuesday that the cap on the subsidised LPG cylinders would go up from six to nine a household a year.
“I think it is likely to go up definitely from six to nine cylinders, and the Cabinet [Committee on Political Affairs] will have to grant its approval to the proposal,” Petroleum and Natural Gas Minister Veerappa Moily told journalists at a function here on Tuesday.
A large number of Congress MPs had written to Prime Minister Manmohan Singh, demanding that the cap be raised to 12 cylinders. On September 13, the government decided to limit the cylinder supply to six, while allowing the consumers to buy additional cylinders at the market price of Rs. 931 a 14.2-kg bottle. Subsidised LPG costs Rs. 410.50 a cylinder in New Delhi. Mr. Moily said he had held two rounds of consultations with Finance Minister P. Chidambaram on the impact of a decision to raise the cap. “I think a decision could happen as early as possible,” he said. The concession would entail Rs. 9,000 crore in additional subsidy a year on the government. “We are working on ways of mitigating the additional subsidy requirement. We are working on certain formula to neutralise it.”
Asked whether the government would make the announcement shortly or wait for the Assembly elections in Gujarat to conclude, Mr. Moily said a decision would be taken before the election process ended and the government would not approach the Election Commission.
Sources said raising the cap would mean that the Finance Ministry would have to shell out Rs. 3,000 crore in additional subsidy this fiscal.