LIQUEFIED PETROLEUM GAS (LPG)
1. Context
Oil marketing companies have raised the price of liquefied petroleum gas (LPG) by Rs 50 per 14.2 kg cylinder in the first hike since October, as international crude prices have surged due to the war in Ukraine. Over 70 per cent of households are estimated to use LPG as their primary cooking fuel and 85 per cent have LPG connections. The hike in prices will impact household inflation expectations, and could further hit subdued consumption sentiment.
2. Global Oil Prices
- The price of LPG has been rising since November 2020; a 14.2 kg cylinder in Delhi now costs Rs 949 -Rs 355 or nearly 60 per cent costlier
- A steady increase in crude prices due to the recovery in demand following the easing of Covid restrictions, slow restoration of production by oil exporters, and the Russia-Ukraine war have contributed to rising prices
- The price of India’s crude oil basket has risen from $41 per barrel in November 2020 to $115.4 as on March 23, 2022
- The government had stopped subsidies on LPG cylinders for most consumers in May 2020, adding to the price burden on consumers
- Due to high inland freight costs, the government now provides subsidies only through its direct benefit transfer scheme to customers in remote areas
3. PNG and CNG Prices
Rising international gas prices have also impacted the price of piped natural gas (PNG) and compressed natural gas (CNG) supplied by city gas distribution companies, as they source imported natural gas in addition to domestically produced natural gas to meet demand
Prices of PNG and CNG are expected to rise further post the next price revision of domestically produced natural gas, which is set to come into effect for a six-month period starting April 1 2023
4. LPG dependence
- LPG is the primary cooking fuel in more than 70 per cent of Indian households, and 85 per cent of households have LPG connections, according to an independent study released by the Council on Energy, Environment and Water (CEEW)
- However, 54 per cent of households continue to use traditional solid fuels such as firewood, dung cakes, agriculture residue, charcoal, and kerosene, either exclusively or with LPG increasing the exposure to indoor air pollution
- The CEEW findings are from the India Residential Energy Survey 2020, conducted in collaboration with the Initiative for Sustainable Energy Policy in FY 19-20 in nearly 15,000 urban and rural households across 152 districts in 21 most populous states
5. Future Inflation
Inflation expectations in India have been sticky as households take time in believing that a high inflation phase is ebbing. Quantitative inflation expectations in India are formed based on households’ experiences of food and fuel inflation, according to a January 2022 RBI working paper titled Taking Cognisance of Households’ Inflation Expectations in India
Households’ median inflation perceptions for the current period moderated sequentially by 70 basis points to 9.7 per cent in January in the latest round of survey conducted by the RBI. But the current period perception is still higher than the perceptions recorded in the same period a year ago
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For Prelims: Exports, Imports, Inflation, Minimum Support Price
For Mains: 1.Examine the impact of international trade agreements on India's rice exports. Discuss the role of organizations such as the World Trade Organization (WTO) and regional trade agreements in shaping India's rice export policies. Analyze how these agreements have influenced the growth, diversification, and sustainability of India's rice export market.
2.Evaluate the significance of Basmati rice in India's agricultural exports. Elaborate on the economic, cultural, and geopolitical factors that have contributed to the prominence of Basmati rice in India's export portfolio. Discuss the challenges and opportunities associated with the production and international trade of this premium rice variety
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Previous Year Questions
1.Consider the following statements: (UPSC CSE 2020)
Which of the statements given above is/are correct? (a) 1 only Answer: (d) 2.With reference to Indian economy, demand-pull inflation can be caused/increased by which of the following? (UPSC CSE 2021)
Select the correct answer using the code given below: (a) 1, 2 and 4 only Answer: (a) 3. Consider the following statements: (2020)
Which of the statements given above is/are correct? (a) 1 and 2 only Answer: (a) |
Source: indianexpress
