Congress workers burn an effigy to protest against LPG price hike at Albert Ekka Chowk in Ranchi on Wednesday. Picture by Prashant Mitra

Ranchi/Jamshedpur, March 2: The state government today clarified that the price of LPG cylinders meant for domestic supply would not increase as the government had not withdrawn the Rs 11.40 subsidy. It added that neither consumers nor distributors would have to pay extra because the food and civil supplies department would directly give the subsidy amount to the oil companies.

The state government has been extending a subsidy of Rs 11.40 per LPG cylinder meant for domestic supply. The subsidy was first introduced by the Madhu Koda government. So far, the subsidy amount was adjusted against the value added tax (VAT) being charged by the state government. The commercial taxes department in turn used to realise Rs 11.40 per cylinder from the food and civil supplies department.

However, a few weeks ago, the Arjun Munda cabinet decided that the subsidy amount would not be adjusted with the VAT. The food and civil supplies department would now directly give the subsidy money to the oil companies and the oil companies in turn will be paying the full tax amount.

Consequently, the commercial taxes department conveyed to the oil companies that the adjustment of subsidy amounts against taxes had been withdrawn. However, the food and civil supplies department reportedly failed to convey to the oil companies that hereafter it would them the subsidy amount. The oil companies acted on the first notice and announced that LPG cylinders would cost more.

“Adjustment of subsidy amounts against taxes charged by the state government has been withdrawn. But, the subsidy on domestic LPG has not been withdrawn. As this issue is related to food and civil supplies department, I cannot comment more,” said commercial taxes secretary Alka Tiwari, who also happens to be a secretary at the chief minister’s secretariat.

Indian Oil Corporation’s deputy manager J.N. Singh, on the other hand, maintained that his company was only informed that adjustment of subsidy amounts against taxes had been withdrawn. Accordingly, the move to increase the domestic LPG prices was initiated. He added that his company was not aware that the subsidy amounts would hereafter be given directly by the state government.

Speaking to The Telegraph, a surprised chief minister Arjun Munda said the price LPG cylinders would not increase as his government had not withdrawn the subsidy. “I will now ask both the food and civil supplies and commercial taxes departments to immediately clarify our stand. Whatever has happened is really unfortunate,” he said.

Meanwhile, the confusion led to a crisis of sorts on the streets with people staging protests and Munda’s taking the opportunity to score against him.

Earlier, in Jamshedpur, deputy chief minister Hemant Soren, who did not seem to be aware that the government had not withdrawn the subsidy on cooking gas, announced that the government would take a fresh decision on “revoking the withdrawal of subsidy”.