Cabinet clears ₹200 gas cylinder subsidy

The Union Cabinet chaired by Prime Minister Narendra Modi on Tuesday decided to slash the price of cooking gas by ₹200 per 14.2kg cylinder for around 330 million people, in a move aimed at easing the strain on household finances hit by soaring retail inflation, which came in at a 15-month high of 7.44% in July.

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The decision to bring back the subsidy in cooking gas for all consumers, which was discontinued in 2020, comes ahead of key state elections later this year.

The reduction in price is also for the 96 million beneficiaries (these are part of the 330 million) of the Pradhan Mantri Ujjwala Yojana, who will now get a subsidy of ₹400, up from the previous ₹200. The additional subsidy alone is expected to cost the government about ₹24,000 crore, depending on prevailing market rates, an official said requesting anonymity. It isn't clear how much the overall cut will cost.

The government also announced it would give an additional 7.5 million connections under the Centre's Ujjwala scheme.

Cooking gas prices were ₹928.50 for a 14.2kg cylinder in May 2014 (in New Delhi), dipped in 2019, but rose ₹1,103 earlier this year. In May 2022, the government announced a ₹200 a cylinder subsidy for beneficiaries of the Ujjwala scheme. That has now been doubled.