Feb 9, 2023 in Public Speaking

What is the Actual Price of Household LPG Cylinder?: A Question of Public

LPG is becoming the most important household energy source for cooking purpose in rural and urban households.

Increasing price of Liquefied Petroleum Gas (LPG) in India became more burden to every citizen as its demand increasing in every economic movements. In India, 833.1 million of rural population and 377.1 million of urban population lives with several efforts to survive (https://censusindia.gov.in/2011-prov-results/paper2/data_files/india/paper2_1.pdf) along with the minimum wage of 366.3 per day for rural (https://www.google.com/amp/s/www.hindustantimes.com/analysis/2021-in-numbers-rural-wages-101639924342914-amp.html) and 21,624 for male and 17,325 for female in urban India (https://www.statista.com/statistics/1071768/india-average-earnings-of-employee-urban-by-gender/). Compared to rural wages, urban Indians receive a monthly salary sufficient to manage their expenses. However, number of rural people is high than the number of urban people which clearly says the number of afflicted people by increasing the price of LPG. Originally, Rural Indian people are not dependent on LPG and in general, forest related products were their main energy sources for household energy purposes. But, later, invention, innovation and government schemes like Pradhan Mantri Ujjwala Yojana (PMUJ) have increased the demand for it unto the every day consumption. Thus, the consumption of LPG increased about 23.2 percent in 2021 (https://www.google.com/amp/s/m.timesofindia.com/business/india-business/lpg-consumption-up-7-3-despite-price-rise-oil-companies/amp_articleshow/81450828.cms). On the other hand, we the consumer always maintaining rational behavior (maximum satisfaction with minimum cost) in marketing and purchasing commodities. Because, we gives responsibility to avoid over expenses. So, the range of LPG consumption among Indians is hiked up as increasing the price and creates a knowledge to know the reasons of LPG price fluctuations among the states of India (For example. Table.1).

Table.1. LPG Price in India (in INR)

Source: https://www.goodreturns.in/lpg-price.html#State+List+for+LPG+Rates+in+India

Note: Bolted cities: Metropolitan or metro cities 
      
LPG price fluctuations may not be an individual authority's contribution while it retrieves by the pricing formula which has economic and socio-economic components. Importing Party Price (IPP) is an usual method determines International market, Free on Board (FOB) price, ocean freight, insurance, custom duties, port dues, etc. Generally, imported LPG is economically engaged with dollars that requires to convert into rupees which boosts the cost of inland freight, marketing costs and margins charged by the oil companies, bottling charges, dealer commission and the GST (Anand Kalyanaraman, 2020). Apart from that, local taxes and price effects made by the state-run oil corporation by the review of rates from time to time on foreign exchange and crude oil rates has made LPG price variations among the state to states (NDTV Profit, 2020). Although, it is all about the pricing formula of imported LPG cylinders.
A few description creates conflicts about the LPG price fluctuations among the states of India. Actually, India imports more than half of its demand for LPG. But the rest is fulfilled by self-production. Apart from general LPG pricing formula, India follows several classifications to price the household LPG cylinders. Indian cities have been classified as the cities which has more than four million people according to Indian census (KVS Hari Kumar and K Aravinda, 2013) is known as Metropolitan and others non-metropolitan. New Delhi, Kolkata, Mumbai and Chennai are certified as Metropolitan cities and has LPG price variations while others are non-metropolitan having different prices according to commands of particular company and local authorities. Moreover, price variations also depend upon two major categories of Cylinders as subsidised and non-subsidised. 
As a result of this, general pricing formula for LPG and classifications of cities and cylinders like Metropolitan and non-metropolitan, subsidised and non-subsidised hides several answers to public.
1. Why LPG related information is only about imported and not about production in India?
2. In India, total cost of LPG production is not mentioned. 
3. How much the average price of produced LPG cylinders in India?
4. Price of non-subsidised LPG is always proclaimed but not for subsidised LPG. 
5. Updated price of LPG for Metropolitan city is informed anytime but not to non-metropolitan cities. Hence, people are confused and not satisfied with the price and pricing formula of LPG. Because, price of LPG differs even street to street in a district. Moreover, subsidy amount also not clearly mentioned that varies house to house. So, people are weak in believing subsidy amount hence, price of subsidised LPG being critical to pay by every household consumers.
Therefore, government must take necessary steps to recover the dissatisfaction level of household LPG consumers by adopting significant programs. Such as, Ministry of petroleum and natural gas needs to discover a clear data on the production of LPG in India. It must be prioritised first than the quantity of LPG imported from foreign countries. And also motivate states to extend the production process. As we have official documents that sum of LPG production process take place, total cost of LPG production should be officially informed to that the pricing formula is being reasonable. Average cost (AC) of a produced LPG should officially informed to know the real worth of 14.2 kg of household LPG cylinders. Publically, price of non-subsidised LPG has proclaimed but price of subsidised LPG is not open to all. Hence, significant action needs to apply for opening grand total of subsidised LPG. Several local authorities take over the pricing control of household LPG in non-metropolitan cities which greatly affects the consumers. Hence, a fixed price should be announced to non-metropolitan cities also.

Reference 

1. Good Returns, 2020, 'LPG Price in India (October 2020)', https://www.goodreturns.in/lpg-price.html#State+List+for+LPG+Rates+in+India
2. Anand Kalyanaraman, 2020,  'All you wanted to know about LPG pricing formula', https://www.google.com/amp/s/www.thehindubusinessline.com/opinion/columns/slate/all-you-wanted-to-know-about-lpg-pricing-formula/article30496150.ece/amp/
3. NDTV Profit, 2020,  'Here's How LPG Prices Have Changed In Past One Year. Find Out Latest Rates Here', https://www.google.com/amp/s/www.ndtv.com/business/lpg-price-july-2020-current-lpg-gas-cylinder-price-how-rates-have-changed-over-last-1-year-2261331%3famp=1&akamai-rum=off
4. NDTV Profit, 2020,  'All You Need To Know About Latest LPG (Cooking Gas) Prices', https://www.ndtv.com/business/lpg-rate-august-2020-heres-how-non-subsidised-lpg-cooking-gas-prices-have-changed-in-past-one-year-2283626
5. KVS Hari Kumar and K Aravinda, 2013, 'Comparison of Research Productivity Between Metro and Non-Metro Cities in a Biomedical Journal from India', https://dx.doi.org/10.4103/2141-9248.113658
6. Web Sources
7. https://censusindia.gov.in/2011-prov-results/paper2/data_files/india/paper2_1.pdf
8. https://www.google.com/amp/s/www.hindustantimes.com/analysis/2021-in-numbers-rural-wages-101639924342914-amp.html
9. https://www.statista.com/statistics/1071768/india-average-earnings-of-employee-urban-by-gender/
10. https://www.google.com/amp/s/m.timesofindia.com/business/india-business/lpg-consumption-up-7-3-despite-price-rise-oil-companies/amp_articleshow/81450828.cms

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