The Modi government on Tuesday said it will cut domestic cooking gas (LPG) prices by Rs 200 as it battles with spiralling prices ahead of the crucial assembly polls in five states later this year.

A 14.2kg LPG cylinder will cost Rs 929 in Calcutta.

For Ujjwala beneficiaries, the price will be Rs 729 after considering the continuing Rs 200 per cylinder subsidy.

The price cut is effective from August 30.

The government will provide an additional 75 lakh Ujjwala connections, which will take the total PMUY beneficiaries to 10.35 crores.

The decision to restore the subsidy will apply to all 33 crore LPG customers in the country.

The total financial implication will be around Rs 10,000 crore annually, and this year, it will cost Rs 7,680 crore.

In the Budget for 2023-24, the LPG subsidy was cut 75 per cent to Rs 2,257 crore from the revised estimate of Rs 9171 crore in 2022-23.

The move comes ahead of the assembly polls in five states — Rajasthan, Chhattisgarh, Madhya Pradesh, Telangana and Mizoram — scheduled for later this year. The Narendra Modi administration’s current five-year term at the Centre also comes to an end next year.

The Congress party used the high LPG prices, which had burnt a hole in the budgets of households already reeling under high inflation, effectively in the recently concluded assembly elections in Karnataka.

It has promised to give LPG at Rs 500 per cylinder if voted to power in Madhya Pradesh, where elections are due in November-December.

The Congress is also providing the LPG at the same price in Rajasthan, where elections are due in November-December.

Thakur, however, refused to link the decision with elections saying it was a gift from the Modi government to women on the occasion of Onam and Raksha Bandhan.

The government in June 2020 stopped giving LPG subsidies. Cooking gas across the country was priced at the market rate.

The only subsidy that was available was for poor women who got free connections under Pradhan Mantri Ujjwala Yojana.

The government gave Rs 200 per cylinder subsidy for up to 12 refills in a year.

The move to cut prices by Rs 200 would bring back the subsidy regime unless the government were to ask the oil companies to absorb the cut and not compensate them.