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LPG beyond quota costlier

Big blow

New Delhi, Jan. 1: The price of non-subsidised cooking gas in Calcutta has been hiked by a steep Rs 219.50 to Rs 1,270 per cylinder. The move will severely hit households who have already exhausted their annual quota of nine subsidised cylinders.

State-owned oil companies revise the rates of non-subsidised LPG on the first of every month, based on the average import cost and rupee-dollar rate during the previous month.

Officials said the harsh cold climate had increased heating demand in Europe and the US, which have increased global LPG rates.

In September 2012, the government had capped subsidised domestic LPG cylinders to six per household in a year. However, the quota was raised to nine per household in January 2013 because of intense political pressure and public demand.

Any requirement above the nine cylinders has to be purchased at market rates. There is no restriction on the number of non-subsidised cylinders a consumer can buy.

A subsidised, 14.2-kg cylinder costs Rs 416 in Calcutta.

Officials said state-owned oil firms were losing Rs 762.70 per cylinder on subsidised LPG.

Indications are that the government may increase the number of subsidised cylinders in a year to 12 to gain political mileage before the Lok Sabha polls as inflation is being seen as one of the major reasons for the loss of the Congress in the Assembly polls.

However, any such move by the government will have to be balanced with a ballooning fiscal deficit.

According to latest data, the government has exhausted 94 per cent of the budgeted fiscal deficit in the eight months of the fiscal. This poses the danger of overshooting the 4.8 per cent red line set by finance minister P. Chidambaram in the face of threats by global rating agencies to downgrade India’s credit rating.

Meanwhile, jet fuel (ATF) prices have been hiked by a steep 6.9 per cent, taking the rates to a lifetime high of Rs 75,031 per kilolitre (kl). Four consecutive increases since June 2013, necessitated by a falling rupee, have seen the fuel price touching new highs.

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