LPG prices exceed Rs 1000: How much is high import dependence to blame?

The LPG prices in India have exceeded Rs 1000. Find out how depending on imports affects domestic prices.

The rise in LPG prices came as a shocker with India already reeling under the severe stress of high inflation. LPG prices rose by more than Rs. 200 in almost 15 months in Delhi. At present, a non-subsidised 14.2 kg LPG cylinder costs Rs. 1,003 in the city. The last time it was priced at this level was way back in March 2014.

Even as LPG cylinders can be found in most households, India cannot fulfill the demand on its own. India’s dependence on LPG imports has significantly increased in the last two decades, and this has made LPG prices more vulnerable to geopolitical shocks.

In the financial year 2001, 88 per cent of India’s LPG demand was met by domestic production and only 12 per cent was met by imports. However, in the financial year 2021, only nearly 40 per cent of the demand was met by domestic production and the remaining 60 per cent was met by imports.

With more than 30 crore customers, the burden of high LPG prices was felt across the country. Only 13 states/UTs including Gujarat, Bihar, Jharkhand, and Odisha have less than 100 per cent coverage, while the all-India average was 103.7 per cent as of March 1, 2022.

The government in recent years has taken various steps to promote the use of LPG cylinders in rural areas as conventional cooking methods cause excess smoke, which is hazardous. However, even after receiving free cylinders, the price barrier to refilling them keeps many away from clean gas.

Sample this: the per capita income of India stood at Rs. 10,571 a month in the financial year 2021, according to MOSPI. This makes an LPG cylinder at its current price almost 10 per cent of the monthly income of an average Indian household, and more so for a rural household.