Cabinet to rescue, LPG subsidy to stay

NEW DELHI: Delhi cabinet on Tuesday turned down a proposal to discontinue/reduce the subsidy on LPG cylinders. So Delhiites will continue to pay Rs
40 less on domestic LPG cylinders even though the proposal had strong backing from the finance department which was reportedly not keen to foot the Rs 168 crore annual tab in times of financial stress and also the approval of the food and civil supplies minister.

Sources say "political compulsions'' have forced the government to stall a decision that is "inevitable in the near future. Chief minister Sheila Dikshit's one-line brief at the end of the cabinet meeting: "The subsidy will continue'' further fuelled specultion about the prime minister's intervention.

Two proposals were placed before the cabinet. One was to discontinue the subsidy in its entirety that would have caused LPG prices to rise to Rs 321.20 and the other was to reduce the subsidy from Rs 40 to Rs 15 so that each cylinder would have cost Rs 306.20. In the latter case, it would have cost the exchequer Rs 5.20 crore per month and Rs 62.25 crore in a year. Incidentally the original 2008 decision of the Centre that had necessitated the subsidy had been revised this January so that the real increase over May 2008 LPG prices is of Rs 25.

According to the cabinet note, the subsidy was extended till march 2009 initially but a decision could not be taken in April because of the code of conduct of the Lok Sabha elections. The matter was again taken up in May and it was decided that the subsidy would continue till the budget session. The government of Delhi, till March 2009 had released Rs 137.22 crore towards footing the subsidy bill.

Ministers except Dikshit remained tight-lipped about the runup to the decision and maintained that most part of more than an hour-long cabinet meeting was taken up by discussions about the Commonwealth Games. There were however, rumours about the CM being "unhappy'' with media reports about the matter being on the cabinet agenda and her "displeasure'' with some of her colleagues for confirming it. "The hype created was too much for the government to go ahead with the decision so soon after the Dwarka and Okhla drubbings and just before the Haryana polls and Diwali,'' said a source.