Category 1- If your income is more than 50,000 a month, you will not be eligible for LPG subsidy
Category 2 - If you own a car/scooter/house/pay income tax, you will be eligible to four subsidised cylinders a year after which you' l have to pay the full rate.
The current subsidy comes upto about Rs. 247 (Delhi).
The situation is reminiscent of that instance in Midnight's Children when Ahmed Sinai says "It's like going to the bathroom.You raise your shirt and lower your trousers. Wife, this government is going to the bathroom all over us" Here too, on the one hand, subsidised LPG became costlier by Rs. 50 just a month-and-a-half ago and on the other, plans are on to cancel subsidies altogether. It's called fiscal prudence, I believe but at the end of the day, its basically going to the bathroom.
Now frankly, Category 1- those with monthly income above Rs. 50,000 is not much of a concern. What seriously concerns me are the following issues.
a) When this proposal was first reported, the idea seemed to be to provide six subsidised cylinders to consumers of category 2 (scooter/house/car owners). Now, the number has come down to four. No clue why(at least till now)
b) The methodology - The decision is based on a study by Oil Marketing Companies (IOC, HPCL and BPCL) which says that 6 cylinders would be approximately enough for a family through the year for at least 65-70% of families. Thus, the same companies who have been arguing for cutting subsidies have conducted this study - a bit like say the Congress conducting a study which concludes that Indian youth want Rahul Gandhi as P.M.
c) Now families which come under Category 2. Owning a scooter or a house would mean that you are way above the BPL families or just-about-APL families. It might also mean that you probably have a house loan, that you are struggling with the excessive fee tuition classes charge your children, that you might have an aged parent whose rising health bills are causing you endless headaches. It might also mean that often, you will choose to not take your vehicle out because petrol prices are soaring too. To such a family the government says - the fiscal deficit is high, so the subsidy will be withdrawn. While the monetary impact may be say Rs 500-750 a year, one cannot imagine a more insensitive move at this point of time.
d) As pointed out here, despite soaring crude prices, international oil supply is stable with global spare oil capacity high. Also, oil producing companies (as opposed to oil marketing ones) seem to be making substantial profits. And to add to fun, the latest bit of news is that in June, despite cuts in excise and customs duty on petroleum products, collections have actually increased from last year.