Here's Why You Haven't Received LPG Subsidy For 3 Months

For the months of May, June and July, residents in India haven't received Direct Benefit Transfer (DBT) on their LPG cylinder purchases.

Households in India are allowed a maximum of 12 LPG cylinder purchases per year at subsidized rates. However, cylinders have to be bought at full price at the time of purchase, and the subsidy is then credited to the customer's bank account by the government.

From May to July, the hike in cooking gas price has been below Rs 10 per 14.2 kg cylinder due to favourable international oil prices amid coronavirus pandemic. During this period, consumers have not received any subsidy for their purchases as it is reportedly the low oil prices in the market that has eliminated the need for the subsidy.

Between July 2019 and July 2020, rates of 14.2 kg subsidized LPG cylinders have been raised by Rs 100.

These rates are generally revised at the start of every month based on changes in the international oil prices and the Indian rupee's valuation against the US dollar.

For August, 14.2 kg LPG cylinder rates have remained unchanged at Rs 594, which is the same rate as the market. According to an analysis by Emkay Global, as reported by IANS agency, oil companies' under-recovery in case of kerosene has come to a naught since March while that for LPG has become zero from May.

Due to Covid-19 pandemic, the government is providing three free LPG cylinders to all below poverty line families who are subscribers of cooking gas under Ujjwala scheme. But other customers are now paying the full amount for the cylinder without getting any subsidy support from the government.

"Together with frequent increase in the price of subsidised cooking gas and a fall in global oil and product prices, the government has completely eliminated their oil subsidy burden on account of LPG since May this year. With oil prices expected to be range blind closer to current levels, the government may not need Rs 37,256 crore as LPG subsidy provided in FY21," said an unnamed energy sector expert quoted in an IANS report.

The government has allocated Rs 37,256.21 crore for the current financial year as LPG subsidy. But so far, the government had to draw very little from subsidy provisions and has reportedly spent the savings on other welfare activities.