The number crunchers of Finance Minister Nirmala Sitharaman’s Budget team may have to do some jugglery to allocate more funds for domestic LPG (liquefied petroleum gas) and kerosene oil subsidy, if the current volatility in global crude prices continues.
The subsidy — the difference between the selling and the purchase price of domestic LPG and kerosene — is paid by the government to public sector oil marketing companies, for selling the product below market prices to poor households.
Higher crude prices mean that the basic cost price of LPG also goes up. To insulate LPG customers from higher prices, the government has the subsidy mechanism. Currently, consumers of domestic LPG in Delhi pay ₹714 for a 14.2-kg cylinder refill. Pradhan Mantri Ujjwala Yojana (PMUY) and other subsidised customers get ₹178.86 as subsidy.
