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.

As of April 17, Madhya Pradesh has 1,120 confirmed cases of COVID-19 - the fifth-highest among all states in India.  The Government of Madhya Pradesh issued one of its initial COVID-19 related orders around January 28, 2020, advising healthcare workers to use appropriate protective gear when examining patients from Wuhan, China.   Since then, the government has taken several actions to contain the spread and impact of COVID-19.  In this blog, we look at key measures taken so far.

Figure 1: Day-wise COVID-19 cases in Madhya Pradesh

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Early stages: Focus on screening international travellers

On January 28, the state government issued directions to monitor international travellers from specified countries, test and maintain surveillance on those who are symptomatic.  A further order required district administrators to monitor and report on all passengers who arrived from China between December 31, 2019 and January 29, 2020.  While efforts were largely focused on screening and testing, the first quarantine restrictions for symptomatic travellers from China, entering India after January 15, were imposed on January 31.  Those leaving quarantine were subsequently kept under surveillance and their health conditions reported on for a period of 14 days.  By February 13, a constant presence of a medical team at the airport was required to test foreign passengers from an increasing list of countries and send daily reports.  

February and early March: Improving public health capacity, restricting social gatherings

The next steps from the government were aimed towards adapting the public health infrastructure to handle the evolving situation.  Following are some of the steps taken in this regard:

  • A helpline, with a dedicated call centre, was set up to inform citizens about COVID-19 and its prevention.
  • The regional directors of the Directorate of Health Services, Government of Madhya Pradesh, were instructed to ensure availability of N-95 masks and PPE kits in their region.
  • The Health Department issued guidelines to the Chief Medical and Health Officials in the State regarding the collection and transport of COVID-19 test samples.
  • Medical professionals in public hospitals were ordered to attend a national training.
  • An order was issued to improve arrangements for quarantine and isolation wards.
  • Leaves were cancelled for all employees/officers of the Health Department. 
  • To grant certain rights to establish effective control over outbreak affected areas and take swift actions, section 71 of the Madhya Pradesh Public Health Act, 1949 was invoked.  This section of the Act provides all Chief Medical and Health Officers and Civil Surgeon cum Chief Hospital Superintendents rights set out therein.  

As the number of cases in India increased through March, the MP government turned focus and issued orders directly concerning their citizens.   Several measures were undertaken to spread awareness about COVID-19 and implement social distancing.  

  • dedicated portal was created for COVID-19 related information.  
  • An order was issued to close several establishments including schools, colleges, cinema halls, gyms and swimming pools.  Biometric attendance was stopped at all government workplaces. 
  • On March 20, the government issued an order (effective till June 15) requiring suppliers of masks and sanitizers to: (i) maintain a fixed price and (ii) keep and present fortnightly, a record of purchase and sales of the essential items.  The order also prevented them from refusing to sell to any customer. 

March 21 Onwards

On March 21, MP reported four cases of COVID-19. On March 23, the government released the Madhya Pradesh Epidemic Diseases, COVID-19 Regulations 2020 to prevent the spread of COVID-19 in the state.  These regulations specify special administrative powers and protocol for hospitals (government and private) to follow while treating COVID-19 patients. These regulations are valid for one year. Over and above general instructions to maintain social distancing and personal hygiene, the government has undertaken specific measures to: (i) increase healthcare capacity, (ii) institute welfare protection for the economically vulnerable population, (iii) strengthen the administrative structure and data collection, and (iv) ensure supply of essential goods and services.  These measures include-

Healthcare measures

  • Preparation of hospitals for the treatment of COVID-19 including postponing elective surgeries, ensuring an adequate supply of PPE kits. 
  • On March 28, the Bhopal Memorial Hospital and Research Centre was designated as a state-level COVID-19 hospital.  This order was reversed on April 15. 
  • District collectors were empowered to appoint doctors and other healthcare workers as required in their districts in a fast-tracked manner.
  • Establishing a telemedicine unit in each of the 51 district hospitals
  • Facilitating the appointment of final year undergraduate nursing students as nurses
  • On March 29, the government launched the SAARTHAK app for daily monitoring and tracking of quarantined and corona positive patients
  • The government released a strategy document to contain COVID-19. This strategy places emphasis on identification of suspected cases, isolation, testing of high-risk contacts, and treatment (called the I. I. T. T. strategy)

Welfare measures

  • One-time financial assistance of Rs 1,000 will be provided to construction labourers
  • One-time financial assistance of Rs 2,000 will be provided to families of Sahariya, Baiga and Bharia tribes
  • Social security pensions for two months will be paid in advance to pensioners
  • People without eligibility slips under the National Food Security Scheme to be allowed to receive ration 

Administrative measures

  • Senior officials were designated to coordinate with various states to resolve issues regarding migrant labour.
  • District Crisis Management groups were formed to coordinate state-level policy and the local implementation machinery.

Supply of essential goods and services

  • On April 8, the government implemented the Essential Services Management Act,1979. The Act among other things, prohibits anyone employed in essential services to refuse to work.
  • E-pass procurement facility was started to ensure smooth inter-district and across states flow of essential goods & services.  

For more information on the spread of COVID-19 and the central and state government response to the pandemic, please see here.