On the occasion of Raksha Bandhan and Onam, the government announced a Rs 200 per cylinder cut in domestic cooking gas prices to relieve households across the nation which high inflation pressures have hit. According to the press release, effective August 30, 2023, the price of a 14.2 kg LPG cylinder will be reduced by Rs 200 in all markets across the country. The press release explained the action by giving an example; in Delhi, for instance, the decision to bring down the price will take the cost of 14.2 kg per cylinder from the existing Rs 1103 per cylinder to a more affordable Rs 903 per cylinder. This reduction is in addition to the existing targeted subsidy of Rs 200 per cylinder to PMUY households, which will continue. For PMUY households, the effective price in Delhi after this reduction will be Rs 703 per cylinder.

The subsidy for PMUY beneficiaries was introduced in May 2022 as part of a series of steps announced by the government to provide relief amid a rally in global energy prices. The opposition party takes the price cut as election pressure, and the government sees it as serving people experiencing poverty.

In the past few months, citizens have already taken the pain from the rising vegetable and pulse prices, and retail inflation numbers tell the rest of the story. In July, retail inflation reached 7.44% from 4.87% in June, marking the fastest rise since April 2022, with consumers facing a sharp 11.5% spike in food prices. Rural residents faced a higher overall inflation rate of 7.63% in July.

There are more than 31 crore domestic LPG consumers in the country, including 9.6 crore PMUY beneficiary families, and this reduction will help all LPG consumers in the country. The government will add new connection holders to the list who have already filed the application for providing deposit-free LPG connections to all eligible households. The government will shortly start distributing PMUY connections to 75 lakh women from poor households who do not have an LPG connection. This will increase the total number of beneficiaries under PMUY from 9.6 crore to 10.35 crore. According to the government, the reduction in cooking gas prices is expected to positively impact the cost of living, along with various other measures taken by the government to overturn the high prices. The additional subsidy on LPG cylinders will come into effect immediately and cost the exchequer more than Rs 7,600 crore.

Following the news, shares of oil marketing companies (OMCs) fell as it was told that the OMC would bear the burden of the subsidies and nothing would be shared by the government. Today, there is news that the government had decided to bear the brunt of the Raksha Bandhan gift and not pass it on to the oil companies. The public sector oil marketing companies made a negative opening today.