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Last week, oil-marketing companies (or OMCs, such as Indian Oil Corporation Limited and Hindustan Petroleum Corporation Limited) raised the price of domestic LPG in the country. [1] The price of a domestic cylinder (14.2kg) has increased from Rs 714 in January 2020 to Rs 858.5 in February 2020. This is a 20% hike in the price of a LPG cylinder. Note that this is the sixth consecutive month for which LPG prices have been revised upwards. Figure 1 shows the variation in price of a domestic (non-subsidised) LPG cylinder in Delhi over the last year.
Figure 1: Variation in price of non-subsidised domestic LPG cylinder
Sources: Indian Oil and Corporation Limited; PRS.
How is the price of LPG cylinders determined?
LPG prices are revised every month. The price is determined by public sector OMCs namely, Indian Oil Corporation Limited, Hindustan Petroleum Corporation Limited and Bharat Petroleum Corporation Limited, in line with the changes in the international market prices and other market conditions. [2] The international market price affects the import parity price of petroleum products (the price that importers pay for import of product at the respective Indian ports). This includes exchange rate, ocean freight, insurance and customs duty among others.
The Ministry of Petroleum and Natural Gas has stated that the recent hike in the price of LPG cylinder is due to a sharp rise in international LPG prices during January 2020 (from USD 448/Metric Tonne to USD 567/Metric Tonne). [3]
What is the difference between the price of a subsidised and non-subsidised cylinder?
The price determined by the OMCs reflects the price of a non-subsidised domestic LPG cylinder. The government modulates the effective price to provide subsidised LPG cylinders to consumers under the 'Pratyaksha Hastaantarit Laabh' direct benefit transfer (or DBT-PAHAL) scheme. [4] Under the scheme, a consumer (with annual income of up to Rs 10 lakh) can avail DBT cash-subsidy for a LPG cylinder. The beneficiaries buy LPG cylinders at market rate and subsequently receive subsidy directly in their bank accounts.
With the recent increase in price of a LPG cylinder, the government has increased the subsidy amount for PAHAL consumers from Rs. 153.86 per cylinder to Rs. 291.48 per cylinder (89% increase).3 This is done to ensure that the subsidized LPG consumers are insulated from the volatility of LPG prices in the international market. Table 1 shows the amount of subsidy provided by the government for LPG cylinder. Note that price of a subsidised cylinder has increased from Rs 494 to Rs 567 (14.8%) from February 2019 to February 2020.
Table 1: Difference between the price of subsidised and non-subsidised LPG cylinder
As on |
Non-subsidised cylinder |
Subsidised cylinder |
Subsidy |
February 2018 |
Rs 736.00 |
Rs 495.63 |
Rs 240.37 |
February 2019 |
Rs 659.00 |
Rs 493.53 |
Rs 165.47 |
February 2020 |
Rs 858.50 |
Rs 567.02 |
Rs 291.48 |
Sources: Unstarred Question No.1211, February 13, 2019, Ministry of Petroleum and Natural Gas, Rajya Sabha.
Note: Prices are at Delhi.
How many people avail the subsidy on LPG cylinders?
Currently, there are a total of 27.16 crore LPG (domestic) connections in the country.3 Of these, 26.12 crore (94%) consumers are beneficiaries under the PAHAL scheme, and therefore, can avail LPG cylinders at subsidised rates. Note that, under the scheme, a maximum of 12 subsidised cylinders per year can be availed under one connection. Further, a household cannot have more than one connection.
What is the cost of subsidy for the government?
The subsidy on domestic LPG is met through the budgetary grants of the Ministry of Petroleum and Natural Gas. In 2020-21, the government is estimated to spend Rs 37,256 crore on LPG subsidy. This includes Rs 35,605 crore for DBT-PAHAL and Rs 1,118 crore for Pradhan Mantri Ujjwala Yojana. This is an increase of 9.3% from the expenditure in 2019-20 of Rs 34,086 crore (revised estimate). Note that LPG subsidy constitutes 87% of the Ministry's total budget (Rs 42,901 crore).
Figure 2 below shows the year-wise expenditure on LPG subsidy, and as a proportion of the total budget of the Ministry from 2015-16 to 2020-21.
Figure 2: LPG subsidy over the years (2015-16 to 2020-21).
Sources: Union Budget Documents; PRS.
For more trends and analysis related to the finances of the Ministry of Petroleum and Natural Gas, see here.
[1] "LPG price hiked by Rs 144.5 per cylinder", Economic Times, February 12, 2020, https://economictimes.indiatimes.com/industry/energy/oil-gas/lpg-price-hiked-by-rs-144-5-per-cylinder/articleshow/74096745.cms.
[2] Frequently Asked Questions (FAQ), Petroleum Planning and Analysis Cell, https://www.ppac.gov.in/content/137_3_Faq.aspx.
[3] "LPG Price is Derived based on International Market Price", Press Information Bureau, Ministry of Petroleum and Natural Gas, February 13, 2020.
[4] PAHAL-Direct Benefits Transfer for LPG (DBTL) Consumers Scheme, Ministry of Petroleum and Natural Gas, http://petroleum.nic.in/dbt/whatisdbtl.html.
The Uttarakhand Assembly concluded a two-day session on November 30, 2022. The session was scheduled to be held over five days. In this post we look at the legislative business that was carried out in the Assembly, and the state of state legislatures.
13 Bills were introduced and passed within two days
As per the Session Agenda, a total of 19 Bills were listed for introduction in the span of two days. 13 of these were listed to be discussed and passed on the second day. These included the Uttarakhand Protection of Freedom of Religion (Amendment) Bill, 2022, University of Petroleum and Energy Studies (Amendment), Bill, 2022, and the Uttarakhand Anti-Littering and Anti-Spitting (Amendment) Bill, 2022.
The Assembly had proposed to discuss and pass each Bill (barring two) within five minutes (see Figure 1). Two Bills were allocated 20 minutes each for discussion and passing - the Haridwar Universities Bill, 2022, and the Public Service (Horizontal Reservation for Women) Bill, 2022. As per news reports, the Assembly passed all 13 Bills within these two days (this excludes the Appropriation Bills). This raises the question on the amount of scrutiny that these Bills were subject to, and the quality of such laws when the legislature intends to pass them within mere minutes.
Figure 1: Excerpt of Uttarakhand Assembly's November 2022 Session Agenda
Law making requires deliberation, scrutiny
Our law-making institutions have several tools at their disposal to ensure that before a law is passed, it has been examined thoroughly on various aspects such as constitutionality, clarity, financial and technical capacity of the state to implement provisions, among others. The Ministry/Department piloting a Bill could share a draft of the Bill for public feedback (pre-legislative scrutiny). While Bills get introduced, members may raise issues on constitutionality of the proposed law. Once introduced, Bills could be sent to legislative committees for greater scrutiny. This allows legislators to deliberate upon individual provisions in depth, understand if there may be constitutional challenges or other issues with any provision. This also allows experts and affected stakeholders to weigh in on the provisions, highlight issues, and help strengthen the law.
However, when Bills are introduced and passed within mere minutes, it barely gives legislators the time to go through the provisions and mull over implications, issues, or ways to improve the law for affected parties. It also raises the question of what the intention of the legislature is when passing laws in a hurry without any discussion. Often, such poorly thought laws are also challenged in Courts.
For instance, the Uttarakhand Assembly passed the Uttarakhand Freedom of Religion (Amendment) Bill, 2022 in this session (five minutes had been allocated for the discussion and passing of the Bill). The 2022 Bill amends the 2018 Act which prohibits forceful religious conversions, and provides that conversion through allurement or marriage will be unlawful. The Bill has provisions such as requiring an additional notice to be sent to the District Magistrate (DM) for a conversion, and that reconversion to one’s immediate previous religion will not be considered a conversion. Some of these provisions seem similar to other laws that were passed by states and have been struck down by or have been challenged in Courts. For example, the Madhya Pradesh High Court while examining the Madhya Pradesh Freedom of Religion Act, 2021 noted that providing a notice to the DM for a conversion of religion violates the right to privacy as the right includes the right to remain silent. It extends that understanding to the right to decide on one’s faith. The Himachal Pradesh Freedom of Religion Act, 2006 exempted people who reconvert to their original religion from giving a public notice of such conversion. The Himachal Pradesh High Court had struck down this provision as discriminatory and violative of the right to equality. The Court also noted that the right to change one’s belief cannot be taken away for maintaining public order.
Uttarakhand MLAs may not have had an opportunity to think about how issues flagged by Courts may be addressed in a law that regulates religious conversions.
Most other state Assemblies also pass Bills without adequate scrutiny
In 2021 44% states passed Bills on the day it was introduced or on the next day. Between January 2018 and September 2022, the Gujarat Assembly introduced 92 Bills (excluding Appropriation Bills). 91 of these were passed in the same day as their introduction. In the 2022 Monsoon Session, the Goa Assembly passed 28 Bills in the span of two days. This is in addition to discussion and voting on budgetary allocation to various government departments.
Figure 2: Time taken by state legislatures to pass Bills in 2021
Note: The chart above does not include Arunachal Pradesh and Sikkim. A Bill is considered passed within a day if it was passed on the day of introduction or on the next day. For states with bicameral legislatures, bills have to be passed in both Houses. This has been taken into account in the above chart for five states having Legislative Councils, except Bihar (information was not available for Council).
Sources: Assembly websites, E-Gazette of various states and Right to Information requests; PRS.
Occasionally, the time actually spent deliberating upon a Bill is lesser than the allocated time. This may be due to disruptions in the House. The Himachal Pradesh Assembly provides data on the time actually spent discussing Bills. For example, in the August 2022 Session, it spent an average of 12 minutes to discuss and pass 10 Bills. However, the Uttarakhand Assembly allocated only five minutes to discuss each Bill in its November 2022 Session. This indicates the lack of intent of certain state legislatures to improve their functioning.
In the case of Parliament, a significant portion of scrutiny is also carried out by the Department Related Standing Committees, even when Parliament is not in session. In the 14th Lok Sabha (LS), 60% of the Bills introduced were sent to Committees for detailed examination, and in the 15th LS, 71% were sent. These figures have reduced recently – in the 16th LS 27% of the Bills were sent to Committees, and so far in the 17th LS, 13% have been sent. However, across states, sending Bills to Committees for detailed examination is often the exception than the norm. In 2021, less than 10% of the Bills were sent to Committees. None of the Bills passed by the Uttarakhand Assembly had been examined by a committee. States that are an exception here include Kerala which has 14 subject Committees, and Bills are regularly sent to these for examination. However, these Committees are headed by their respective Ministers, which reduces the scope of independent scrutiny that may be undertaken.