Liquefied Petroleum Gas
Liquefied Petroleum Gas (LPG), is a flammable mixture of hydrocarbon gases
used as fuel in heating appliances, cooking equipment and
vehicles. It is a mixture of propane and butane. Since December,
2020, the price of domestic use LPG cylinders has been hiked
many times.
The retail selling price of domestic gas was Rs. 410.5 per
14.2 kg cylinder on March 1, 2014. This month, on March 2021, the same cylinder
cost is Rs. 819. Union Minister of Petroleum & Natural Gas and Steel,
Dharmendra Pradhan answered to a question in Lok Sabha. The price of LPG
has increased by 41% or Rs. 237.5 per cylinder in the last 10 months. In May
2020, the Price of cylinder was Rs. 581 and on March 1, 2021, the cost of same
cylinder is Rs. 819. In 2021 alone, prices were hiked by Rs. 125 per cylinder.
Major Reason:
1. Hike in the price of propane and butane at International
level
The price of propane in May 2020 was $230 per metric tonne
and butane was at $240 per metric tonne, while as on March 2021, the price of
propane is $625 per metric tonne. Similarly, butane price also increased and
$595 per metric tonne. In February, Saudi Aramco increased propane rate by $20
per metric tonne and butane price by $10 per metric tonne in March.
Both gases are major components of LPG and have commercial
and residential uses like heating, cooking, vehicles refrigerator and much
more. LPG has 60% share of butane and 40% share of propane.
2. Huge Growth in Consumption: Ujjwala Yojana
At present there are approximately 28.8 crore LPG consumers
in India. It was 14.8 crore in 2014-15. There has been 95% increase in LPG
consumption from 2014-15. The major reason behind consumption of LPG is Pradhan
Mantri Ujjwala Yojana (PMUY). Ujjwala Yojana was a Modi government’s
initiatives to subsidize LPG cooking fuel for families below the poverty line
so that they could move away from older methods of cooking. Free LPG connection
were distributed by the government to more than 8 crore people below poverty
line under Ujjwala Yojna.
3. Subsidy terminated by government
Government has eliminated the subsidy on LPG, when
international prices dipped during corona pandemic. Government stopped paying a
subsidy under Direct Benefit Transfer on LPG (DBTL) scheme from May 2020.
Government has also reduced the amount of LPG subsidy. It was Rs. 35,605 crore
in 2019-20 and 25,620 crore in 2020-21. In this budget Finance Minister Nirmala
Sitharaman announced only Rs. 12,480 crore for LPG subsidy. It is clear that
government don't want to provide LPG subsidy.
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