In election season, government holds back LPG price hike

In election season, government holds back LPG price hike
New Delhi:

Close to midnight on Thursday, the government put on hold a decision announced only hours before to hike the price of non-subsidised LPG cylinders by Rs. 26.50. The petroleum ministry reportedly sent out a late night instruction to public sector oil marketing firms not to effect the hike.

The announcement of the hike raised more eyebrows than the volte face did. It came just three days before Himachal Pradesh votes for a new government; the Congress needs to wrest that state back from the BJP and LPG is a major poll issue. The crucial Gujarat elections are also weeks away. Then, Diwali, the most important festival in many parts of India, is round the corner.

Sources said yesterday's midnight rethink on the hike apart, there is pressure from within the Congress on the government it heads to review its larger decision to cap subsided LPG cylinders taken in September this year. New Oil Minister M Veerapa Moily will reportedly look into how more relief can be given to the common man already hit by high inflation and the emotive and politically fraught issue is also expected to be discussed when the Congress's top leadership meets on November 9 to review the implementation of the party's manifesto.

In Himachal Pradesh, where campaigning ends today and polling will be held on Sunday, the cap on use of subsidised LPG cylinders has become a big issue. A number of regions in the hill state will soon be battling extreme cold in the winter months: a time when people in far flung and ice-capped hilly regions rely primarily on LPG cylinders, not just for cooking, but even to keep warm. Since burning of firewood is not allowed due to environmental concerns, the Centre's move has been hotly debated. One independent candidate in Shimla has even made it his election symbol. And for the Congress, it has been difficult to ignore.

In September, the Manmohan Singh government had announced, as part of its first big reforms push in months, that it was limiting the use of subsidised LPG cylinders at six a year for every household. For anything beyond that the consumer would have to buy cylinders at market or non-subsidised rates. In Delhi, a non-subsidised LPG cylinder costs Rs. 895.50. The same cylinder subsidised, costs Rs. 410.42. If yesterday's price hike had been effected the non-subsidised cylinder would have cost Rs. 922 in Delhi. A non-subsidised, 14.2 kg cylinder will now continue to cost Rs. 880 in Mumbai, Rs. 888.50 in Chennai and Rs. 886.50 in Kolkata.

Within days of the UPA biting the subsidy bullet, Mamata Banerjee's Trinamool Congress exited the government, plunging it into a minority. Parties like the Samajwadi Party and the Bahujan Samaj Party, which prop the UPA government with external support have also said they are unhappy with the LPG decision. Allies DMK and even Sharad Pawar's NCP, which supports tough reforms-oriented decisions, have suggested a review of the LPG move.

The Congress has asked its state governments to allow an additional three subsidised cylinders to below-poverty-line households.

Ms Banerjee, who is now playing the opposition role aggressively, said on Facebook after the hike was announced yesterday: "The present UPA government is really becoming irresponsible and intolerable.

Even being a minority government, they have been taking all major policy decisions affecting the survival of common people." She also made it apparent that she was trying to rally political support to protest the latest hike in prices.

Revised prices were announced yesterday in keeping with firming international rates. State-owned oil firms revise rates of non-subsidised LPG on the 1st of every month, as they do for petrol and aviation turbine fuel, or jet fuel, based on the average imported cost and rupee-US dollar rate in the previous month.