Recent rise in LPG prices
Distilled Policy Brief
- Public sector Oil Marketing Companies (OMCs) determine domestic LPG prices based on international market prices and the import parity price, which incorporates factors such as exchange rate, ocean freight, insurance, and customs duty.
- Under the DBT-PAHAL scheme, eligible consumers with an annual income of up to Rs 10 lakh purchase LPG cylinders at market rates and subsequently receive subsidies directly in their bank accounts, covering 94% of the 27.16 crore domestic connections.
- The LPG subsidy is funded through the budgetary grants of the Ministry of Petroleum and Natural Gas, with the 2020-21 estimate of Rs 37,256 crore (including Rs 35,605 crore for DBT-PAHAL and Rs 1,118 crore for Pradhan Mantri Ujjwala Yojana) constituting 87% of the Ministry's total Rs 42,901 crore budget.
🎯 Prelims High-Yield Examination Points
Determinants of LPG import parity pricing and the eligibility criteria (income ceiling and cylinder limits) under the DBT-PAHAL scheme.
⚖️ Mains Analytical & Syllabus Linkages
Analyze the fiscal implications of energy subsidies on India's budgetary health and the effectiveness of Direct Benefit Transfer (DBT) in rationalizing subsidy leakages.
🎯 UPSC Prelims Practice Drill
With reference to the Liquefied Petroleum Gas (LPG) pricing and subsidy mechanism in India, consider the following statements: 1. Public sector Oil Marketing Companies (OMCs) determine domestic LPG prices based on international market prices and the import parity price. 2. Under the DBT-PAHAL scheme, all domestic LPG connections receive subsidies directly in their bank accounts, irrespective of their annual household income. 3. The LPG subsidy, which includes DBT-PAHAL and Pradhan Mantri Ujjwala Yojana (PMUY), is funded through the budgetary grants of the Ministry of Petroleum and Natural Gas. Which of the statements given above are correct?
- [A] 1 and 2 only
- [B] 2 and 3 only
- [C] 1 and 3 only
- [D] 1, 2 and 3
▶ Reveal Official Answer & Analytical Explanation
Statement 1 is correct as public sector OMCs determine domestic LPG prices based on international market prices and the import parity price (which includes exchange rate, ocean freight, insurance, and customs duty). Statement 2 is incorrect because the DBT-PAHAL scheme is restricted to eligible consumers with an annual income of up to Rs 10 lakh, covering 94% (not all) of domestic connections. Statement 3 is correct as the LPG subsidy is funded through the budgetary grants of the Ministry of Petroleum and Natural Gas, constituting 87% of the Ministry's total budget in 2020-21.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.