“I think it is likely to go up definitely from six to 9 cylinders and the Cabinet will have to now grant its approval to the proposal,” Petroleum and Natural Gas Minister, Veerappa Moily told reporters at a CII function here.
He said the matter will have to go to the Cabinet Committee on Political Affairs which will have to put a seal of approval on the new cap.
The announcement by Moily comes after a large number of MPs from the ruling Congress wrote to the Prime Minister to raise the cap of subsidised LPG cylinders from six to 12 cylinders.
The government had on September 13, capped supply of subsidised LPG to six cylinders per household in a year.
Any additional requirement is to be bought at market price of Rs. 931 per 14.2-kg bottle. Subsidised LPG costs Rs. 410.50 per cylinder at present in Delhi.
Moily said he had already held two rounds of consultations with the Finance Minister P. Chidambaram, on the impact of the decision raise the cap from six to nine.
“I think a decision could happen as early as possible,” he remarked. The government will have to provide an additional Rs. 9,000 crore annually if the cap is raised.
“We are working on the issue of ways to mitigate the additional subsidy requirement. We are working on certain formula to neutralise it,” he remarked.
Asked if the government would announce the decision shortly or wait for the Gujarat elections to end, Moily said a decision would be taken before the Gujarat elections end, and added that the government will not approach the Election Commission (EC) on the issue.
Sources said raising the cap on supply of subsidised LPG to nine cylinders per household in a year will mean that the Finance Ministry will have to provide an additional Rs. 3000 crore subsidy this fiscal and Rs. 9000 crore annually.
However, officials in the Petroleum Ministry said that as of date, the Finance Ministry has not conveyed its approval of the scheme or endorsed the demand that it was ready to take the additional subsidy burden.
“The matter is still in the discussions stage with the Finance Ministry and there has been no commitment on the issue. There is no formal approval for the enhanced cap in place and we will have to wait for a final nod from the Finance Department,'' a senior official remarked.
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