India cuts prices of cooking gas as inflation bites

(Reuters) - India cut the price of cooking gas for households on Tuesday by about 18% to rein in inflation ahead of crucial state and general elections.

The government reduced the price by 200 rupees ($2.42) on a 14.2-kilogram (33 pounds) cooking gas cylinder sold to 330 million households, Information Minister Anurag Thakur told reporters.

The decision will impact about 100 million low-income families who form a key voter base and have felt the pinch of the rise in food prices over the last few months, as India's annual retail inflation hit a 15-month high in July.

Prime Minister Narendra Modi's government has been criticized by the opposition over high inflation and the price of liquefied petroleum gas (LPG) ahead of elections in five states in the coming months and national elections in mid-2024.

"This is a gift to millions of my sisters of the country," Modi said in a statement, adding that his government "will always do everything possible that improves people's quality of life and benefits the poor and middle class."

The government will have to spend an additional 40 billion rupees for the enhanced cooking gas subsidy, in addition to about 76 billion rupees it has budgeted for the current fiscal year.

India imports about 60% of its liquefied petroleum gas requirement, and Thakur said LPG prices globally have surged 303% since April 2020.

The cut will double the subsidy support provided to the country's 96 million poor under a welfare program, increasing it to 400 rupees per cylinder as part of the "Ujjwala scheme".

The subsidy extension on cooking gas was one of the key factors that helped Modi win the 2019 general election.

Prices of cooking gas will be reduced to 903 rupees per cylinder for domestic consumers in New Delhi following the cut and to 703 per cylinder for welfare program beneficiaries. LPG is part of the fuel and light basket, which constitutes nearly 8% of the retail inflation basket.

The federal cabinet has also approved a plan to provide free cooking gas stove and connection to 7.5 million new beneficiaries under the scheme, Thakur said.

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