In response to rising international fuel prices, the Government of India has implemented several strategies to protect common citizens. These measures include diversifying the crude import basket, imposing windfall taxes on petroleum product exports, ensuring the availability of petrol and diesel through Universal Service Obligations, and increasing ethanol blending in petrol.
To alleviate the financial burden on consumers, the Central Government reduced Central Excise duty on petrol and diesel by Rs. 13 and Rs. 16 per litre, respectively, in November 2021 and May 2022. These reductions were fully passed on to consumers. Additionally, some state governments lowered state VAT rates to provide further relief. In March 2024, Oil Marketing Companies (OMCs) reduced retail prices of petrol and diesel by Rs. 2 per litre, setting current prices in Delhi at Rs. 94.72 for petrol and Rs. 87.62 for diesel per litre.
India imports over 60% of its domestic LPG consumption, with prices linked to international markets. Despite a significant increase in the average Saudi CP (the international LPG benchmark) from $415 per MT to $712 per MT between 2020-21 and 2022-23, the government did not fully pass on these increases to consumers. Under the PAHAL Scheme, domestic LPG cylinders are sold at non-subsidized prices, with applicable subsidies transferred directly to consumers’ bank accounts. To further mitigate the impact of high international prices, the government compensated OMCs with Rs. 22,000 crore in FY 2022-23.
Effective from May 21, 2022, the government has been providing a targeted subsidy of Rs. 200 per 14.2 kg LPG cylinder for Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries for up to 12 refills per year. On August 30, 2023, the retail selling price of domestic LPG was reduced by Rs. 200 per cylinder. Subsequently, on October 5, 2023, the targeted subsidy was increased to Rs. 300 per cylinder for PMUY beneficiaries, followed by another reduction in the retail price of domestic LPG by Rs. 100 per cylinder on March 9, 2024.
Currently, the retail selling price of domestic LPG in Delhi is Rs. 803 per 14.2 kg cylinder. With a targeted subsidy of Rs. 300 per cylinder, the effective cost for PMUY consumers is Rs. 503 per 14.2 kg cylinder.
This information was provided by Minister of State in the Ministry of Petroleum and Natural Gas, Suresh Gopi, in a written reply to the Rajya Sabha on Monday.
