New Delhi (Reuters) – India cut the price of cooking gas for households on Tuesday by about 18% to rein in inflation ahead of crucial state and general elections.
The government reduced the price by 200 rupees ($2.42) on a 14.2-kilogram (33 pounds) cooking gas cylinder sold to 330 million households, Information Minister Anurag Thakur told reporters.
The decision will impact about 100 million low-income families who form a key voter base and have felt the pinch of the rise in food prices over the last few months, as India’s annual inflation rose to a 15-month high in July.
The government will have to spend an additional 40 billion rupees for the enhanced cooking gas subsidy, in addition to about 76 billion rupees it has budgeted for the current fiscal year.
“The reduction in prices is aimed at providing direct relief to families and individuals, while also supporting the government’s larger goal of ensuring affordable access to essential items,” Oil Minister Hardeep Singh Puri said in a statement.
The cut will double the subsidy support provided to the country’s 96 million poor under a welfare programme, increasing it to 400 rupees per cylinder as part of the “Ujjwala scheme”.
The subsidy extension on cooking gas was one of the key factors that helped Modi win the 2019 general election.
The federal cabinet has also approved a plan to provide free cooking gas stove and connection to 7.5 million new beneficiaries under the scheme, Thakur said.
India imports about 60% of its liquefied petroleum gas requirement, and Thakur said LPG prices globally have surged 303% since April 2020.
