Cabinet extends ₹300 cooking gas subsidy for another year
THE Union cabinet on Thursday approved the extension of the ₹300 subsidy on cooking gas cylinders for beneficiaries of the Pradhan Mantri Ujjwala Yojana scheme for the next financial year (FY25).
The subsidy was to end this fiscal year. The extension would lead to an outgo of ₹12,000 crore for the government.
"The Union Cabinet chaired by Prime Minister Narendra Modi approved the continuation of targeted subsidy of ₹300 per 14.2 kg cylinder (and proportionately pro-rated for 5 kg cylinder) for up to 12 refills per year to be provided to the beneficiaries of Pradhan Mantri Ujjwala Yojana (PMUY) during FY 2024-25," the government said in a statement.
As of 1 March, the PMUY scheme had about 102.7 million beneficiaries availing of the subsidy, which is credited directly to their bank accounts.
The extension of the welfare scheme comes ahead of the general election that’s expected to be conducted in April-May. On 5 January, Mint reported that the scheme may be extended for another year with an outgo of ₹10,000-12,000 crore.
In October, the subsidy was increased from ₹200 to ₹300 per cylinder for up to 12 cylinders annually. A price cut of ₹200 per cylinder had been announced earlier, on 30 August 2023.
In New Delhi, PMUY beneficiaries now pay ₹603 per domestic cylinder of cooking gas, while others pay ₹903.
PMUY was rolled out in 2016 to provide cleaner cooking fuel to poor households. The beneficiaries were identified through the socio-economic caste census list or from seven other identified categories such as scheduled caste households, scheduled tribe households, most backward classes, and beneficiaries of the PM Awas Yojana (Gramin) scheme.
In September, the government announced an additional outlay of ₹1,650 crore for providing 7.5 million free cooking gas connections over three years from FY24 to FY26.
To a large extent, state-run oil marketing companies have absorbed the impact of high prices without fully passing them on to consumers. In October 2022, the government announced a one-time ₹22,000-crore compensation to state-run fuel retailers to offset their losses from selling domestic cooking gas below cost.
The targeted subsidy was started in May 2022 to shield consumers from rising international gas prices due to the Russia-Ukraine war.
According to the government, the average LPG consumption of PMUY consumers has increased from 3.01 refills in 2019-20 to 3.87 refills in FY24 (as of January).
