Govt may do away with LPG subsidy for high-income groups

The government is considering doing away with the LPG subsidy for consumers in the top income bracket (who pay 30 per cent tax), as part of its larger plan of phasing out subsidies, according to reports.

Finance minister Arun Jaitley is expected to announce a roadmap for rationalisation of subsidy for liquefied petroleum gas (LPG) in the union budget to be presented this month-end.

In order to weed out the ''undeserving'' from the beneficiary list, the finance minister may set certain criteria, such as those falling in the 20 per cent income (earning Rs5-10 lakh) and 30 per cent (Rs10 lakh and above) tax brackets, say reports.

Currently, each consumer is allotted 12 LPG cylinders at subsidised rates of Rs414 each (in Delhi) while requirements above that limit has to be met by purchases at the market price of Rs880 per 14.2-kg cylinder.

Currently, only LPG and kerosene supplied through the public distribution system (PDS) are eligible for government subsidy.

The Narendra Modi-led government had, in October last year, deregulated diesel prices and linked them to the market while petrol prices have already been taken out of the administered price regime by the previous government.

The subsidy bill of the government on account of LPG stood at Rs46,458 crore last fiscal. Any withdrawal of subsidised LPG connections will help cut the government's subsidy bill.

The government saw its total fuel subsidy bill on the sale of kerosene, LPG and diesel (which is no longer under the subsidy net) rose to about Rs63,000 crore in the 2014-15 fiscal.