With the hike of Rs 25 on August 17, the LPG price in India has now increased by Rs 165 since the beginning of 2021.
With India's Liquified Petroleum Gas (LPG) price rise of Rs 25 on August 17, a non-subsidised 14.2 kg LPG cylinder now costs more than Rs 850 in most cities, nearing towards Rs 900 in some.
The rate of cooking gas has now increased by Rs 165 since the beginning of 2021. The price of LPG is revised in India as per a formula known as import parity price (IPP). The common practice is to revise the price of LPG cylinders on a month-on-month basis.
New prices are generally enforced from the first of a month. Before August 17, the last price hike took place on July 1, 2021.
The formula for LPG price calculation
Calculations as per the import parity price depend on fluctuations in LPG prices in the international market. India uses IPP due to the fact that a major portion of its consumption is satisfied by imports.
The IPP is calculated as per Saudi Aramco’s LPG price, the world’s largest producer. The price includes costs like free on board (FOB) price, ocean freight, custom duties, port charges and insurance cost among other things.
The international price for LPG fluctuates in accordance with the price of its main raw material, crude oil.
The price thus calculated in US dollars is then converted to Indian rupees.
The price you pay
To the international price, charges added domestically include inland freight costs, Oil companies’ margins, bottling costs, marketing expenses, dealer commissions and the Goods and Services Tax (GST). The final price thus calculated gives the retail selling price for non-subsidised cooking gas cylinders for consumers across different states.
While this calculates the non-subsidised price, many people in India avail subsidies offered by the central government on LPG cylinders. The subsidy amount is subject to change from one month to the next based on the international price of LPG and fluctuations in currency value.
There are also schemes like the Pradhan Mantri Ujjwala Yojana, under which the government provides free LPG cylinders to women from poor families.
What causes LPG prices to rise
With India’s LPG pricing dependent on IPP, factors such as rising price in the international market and decrease in the value of the Indian rupee can cause revisions in the price of LPG.
The global spread of the Delta variant of COVID-19 has impacted oil benchmarks which are down 11 percent in less than 15 days of trading. Investor confidence is also low for the same reason.
With the latest hike, the price of a non-subsidised LPG cylinder’s price is Rs 859.50 in both Delhi and Mumbai, Rs 875.50 in Chennai, Rs 886.50 in Kolkata. One of the highest prices in the country is in Lucknow at Rs 897.5 per cylinder.
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 "DNA Explainer: How is the price of LPG cylinder calculated in India? Why and when does it rise?")
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