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Lpg Cylinder Subsidy Is Zero, Know How Much You Will Benefit

Lpg Cylinder Subsidy Is Zero, Know How Much You Will Benefit

Lpg Cylinder Subsidy Is Zero, Know How Much You Will Benefit

Amid the Corona crisis in the country , there has been good news for the government and consumers regarding LPG cylinders. The government is now getting LPG at cheaper prices due to the continuous decline in crude oil and gas prices in the international market. This is the reason why the government no longer has to incur any expenditure as a subsidy given in the domestic market. This means that now the subsidy on LPG cylinders has reached zero. What is shocking is that from this month onwards, the government will earn Rs 120 per cylinder even after subsidizing the consumer.

Gas became cheaper in the international market
One of the reasons is that for the last few months,

the government has been raising the price of unsubsidised cylinders for domestic consumers.

That is, on the one hand the government had increased prices,

on the other hand gas has become cheaper in the international market.

As a result, the subsidy was reduced to almost zero.

The central government launched the Direct Benefit Transfer DBT scheme in January 2015. Under this scheme, the consumer pays the market price of LPG cylinders and the government sends the subsidy directly to their account.

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That’s because for the first time since at least 2011, the subsidy on the 14.2 kg domestic LPG cylinder has dropped to ‘zero’.

he government’s decision to up the price of subsidised cylinder over the past several months along

with the recent fall in non-subsidised LPG price has led to zero subsidy for the first time in years.

In fact, according to a calculation by a Nomura report, oil companies may end up

making an over-recovery of Rs 120 on every cylinder in May.

The introduction of the Direct Benefit Transfer scheme in January 2015 — in

which consumers would pay full (market) price for non-subsidised cylinders LPG cylinders,

while the government reimburses a subsidy amount directly into their bank accounts —

promised to usher in a new, transparent pricing regime.

In the previous system, oil marketing companies would sell cylinders below cost to consumers,

and then wait for the government to reimburse them for the losses (also called under-recoveries in industry parlance).

But the government changed the system and fixed the prices of unsubsidized

cylinders between October 2017 and July 2019.

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