Rural households pay about 10% of their monthly income on LPG

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Since May 2020, when the government stopped subsidising liquefied petroleum gas (LPG), the current record-high price (859.5/cylinder in Delhi) of a standard 14.2-kg cylinder .

It has resulted in rural households spending nearly 10% of their monthly income on the cooking fuel, according to a study by the Council on Energy, Environment, and Water (CEEW).

According to the survey, 85 percent of families in the country have LPG connections, with 80 percent of non-user households citing affordability as a reason for not having one. Before the epidemic in FY20, CEEW performed the India Residential Energy Survey 2020 in conjunction with the Initiative for Sustainable Energy Policy, which covered approximately 15,000 urban and rural households in 152 districts throughout India’s 21 most populous states.

Since May 2020, a decline in worldwide crude oil prices, and hence global LPG product prices, has allowed the government to remove the LPG subsidy. Due to low global LPG prices, end users did not feel the pinch until November 2020. Domestic LPG cylinders cost roughly 600 dollars even without subsidies, which is close to the price at which the subsidy kicks in.

Despite the fact that worldwide prices have grown since then, the government has refused to renew the subsidies.

India imports more than 55% of its LPG, and the price of an unsubsidized cylinder is determined by world pricing. “In the last few months, supply has not gone up globally, but demand has increased, leading to higher prices,” Tarun Kapur, secretary of the Union ministry of petroleum and natural gas, said on Monday, adding that “refineries [globally] don’t like to produce LPG because distilling petrochemicals can give them a higher return.”

“Crude prices went up, then dropped down, and now they are marginally going up,” Kapur explained, “but LPG prices did not come down despite the drop in crude prices.”

As global rates began to rise, the retail price of domestic LPG without subsidies topped $800 per cylinder in May, causing a considerable number of low-income consumers to refuse to refill their cylinders. In the first quarter of FY22, 3.2 crore beneficiaries of the Pradhan Mantri Ujjwala Yojana plan did not replenish their LPG cylinders.

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