State-run oil firms can now raise prices of kerosene and cooking gas every month

Coming months would see a gradual rise in the prices of subsidised cooking gas and kerosene oil, which would slowly reduce their subsidy burdens. This would happen because the government has allowed state-run oil firms to raise prices every month albeit by a fixed amount.

While the price of subsidised kerosene has increased by Rs 4 per litre, or about 27% since June, the price of subsidised cooking gas has risen by Rs 22 per cylinder or about 5% in this period.

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One can see a stark difference while comparing these price rises to those of petrol and diesel, which are no more controlled by the government,. Their prices have increased by merely about 1% and 3%, respectively.

It was last year that the government had allowed Indian Oil Corporation, Bharat Petroleum and Hindustan Petroleum to raise prices of kerosene by 25 paise per litre every fortnight. This was allowed for 10 months, and ended in February. On the other hand, cooking gas prices were asked to be increased by Rs 2 per month, but no timeframe was mentioned.

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However, now the oil ministry has issued a fresh order, which allows state-run oil firms to again raise prices of kerosene by 25 paise/litre per month for another four months. This would be implemented from April onwards. Companies can also increase cooking gas prices by Rs 2 per month, for which no time limit has been set.

As per industry insiders, the government plans to keep the overall oil subsidy burden controlled by continuing to gradually raise prices.

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(Image source WSJ)