The government’s decision to slash domestic cooking gas prices by Rs 200 per 14.2-kg cylinder and expand the Pradhan Mantri Ujjwala Yojana (PMUY) by adding 75 lakh poor households to its beneficiary base could cost upwards of Rs 37,000 crore on an annualised basis, an analysis of liquefied petroleum gas (LPG) consumer base and average gas refill data suggests. For the computations, it is assumed that the LPG cylinder refill rates will stay at the levels recorded for 2022-23 (FY23) and fuel retailers will continue to sell LPG to households at a price that is Rs 200 lower than what they would have charged for a cylinder had the price cut not been announced.
On its part, the government has not provided any estimate of the cost of the twin decisions. Speaking on condition of anonymity, a senior official in the finance ministry said that the actual cost could be somewhat “lower” than this estimate as there are a number of variables in the equation. These include possible over recoveries on LPG sales by fuel retailers, movement in international crude and LPG prices going ahead, and currency fluctuations. The official, however, did not provide any estimation of what the actual cost might be.
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