Intervention needed

Update: 2022-05-08 16:22 GMT

Oil Marketing Companies (OMCs) increased the price of LPG cylinder by Rs 50 on Saturday — within two months of a hike by the same amount on March 22 this year. The per cylinder price of 14.2-kg domestic LPG cylinder has now crossed Rs 1,000 mark in some cities while others are also edging on the four figure-mark. In fact, the LPG prices have been rising consistently ever since the first wave of the pandemic subsided and demand started catching up. In Delhi, the prices have risen by Rs 405 since November 2020. Notably, the Saturday hike has come after a more than Rs 100 increase in 19-kg commercial cylinder towards the start of this month. As per a study by Council on Energy, Environment and Water (CEEW), 85 per cent of Indian households have an LPG connection — of which 70 per cent use it as their primary fuel. This overwhelming dependence on the cooking fuel makes a large section of the Indian population vulnerable to economic shocks that are already present in pronounced measure on account of high retail inflation — particularly the soaring prices of food and transport fuel. Multiple reports have reaffirmed that post the second and first wave of the pandemic, millions have slipped into the trap of poverty, with their ability to spend on basic necessities of life getting more diluted. LPG price hike hurts the already wounded population significantly. In macroeconomic terms, the hike will also impact national growth on account of lower levels of consumption — which is one of the primary drivers of economic growth of any nation. Furthermore, news reports show that the poor in India are already cutting down on the items of their meal — particularly 'supplements' like green vegetables, which have twin repercussions of degraded public health and a dent on the welfare image of the government. Obviously, LPG price hike cannot be attributed as a primary causal factor behind the economic distress, but it could prove to be a significant exacerbating force. Another major negative externality of consistently rising LPG prices is related to ecology. LPG has been lately replacing dirty cooking fuels like cow dung cake, wood, coal etc. in the rural and semi-urban parts of the country. Despite impressive connection numbers, abstention from refilling of LPG cylinders has been a very concerning issue. Rising costs of cylinders will not only deter people from taking new connections but also force them to resort back to polluting cooking fuels — undoing the decades of improvement made in this regard. Policy and research analysts have been grappling for a long time to find out ways to promote regular refilling of LPG cylinders. Notably, despite a lot left to be achieved in the future, increased LPG use for cooking is saving many lives by freeing people from the grip of smoky chimneys called mud stoves (or chullahs). It is true that LPG prices are linked to international benchmarks that have been increasing oil prices lately but, given the multi-dimensional repercussions of the hike, the government must consider coming up with necessary interventions to heal the wounded sentiments of people and provide a leverage for growth to the economy. In view of increasing freight rates, the government had rolled back subsidies on LPG cylinders in May 2020 — though it continues to pass on the subsidy in remote areas through direct benefit transfer. It is high time that the government considers bringing back the subsidy, at least as a temporary arrangement. The government has been facing a backlash from opposition parties for the overall increase of prices of essential commodities. West Bengal Chief Minister Mamata Banerjee termed the price hike spree as a "Great Indian Loot". Leaders from other national parties, including the INC, have also been criticising the government on this front. The government should seriously consider the apprehensions raised by the opposition parties and act with empathy to address the concerns of the people. Government intervention appears to be an imperative as the cost of LPG price hike extends beyond the monetary aspect, impacting the social and ecological facets of human life as well.


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