A day after the cabinet approved a Rs 200 cut in the prices of cooking gas, union minister Hardeep Singh Puri said the burden will be borne by the Centre and not the oil marketing companies (OMCs). He also reiterated India’s resolve to meet its fuel demand from the cheapest source amid western sanctions on Russia.

Tuesday’s announcement would have resulted in a Rs 75,000 crore hit to OMCs.

Adding that the LPG price cuts will relieve Indians from the rising retail inflation, Puri told CNBC TV18 that the government is also intensifying efforts to cut fuel prices.

However, opposition parties have called the government’s move a tactic to save face ahead of the polls in five states, where price rise could be a key issue. They believe inflationary concerns and surge in the prices of everyday essentials have dented the BJP’s image and the party is going all out to woo voters before the 2024 national elections.

Puri also said India would continue buying from sources that offer the lowest price so that it can offer such initiatives. “We are very clear in our minds that we will buy oil from wherever we can get it as long as it is delivered to our point of importation at our ports at the lowest possible price,” he noted.

India, which imports 80% of its oil, has been buying discounted crude from Russia since western countries imposed sanctions on it amid the war in Ukraine. Russia is now India’s biggest oil supplier.

Food price surge a worry for RBI: Meanwhile, on inflation, two members of the Reserve Bank of India’s monetary policy committee told Bloomberg that the central bank will have to ensure that there is no spillover from the surge in food prices.

The RBI wants to retain inflation levels at 6%. Retail inflation had jumped to a 15-month high of 7.44% in July on the back of an 11.51% rise in food prices, which accounts for nearly half the consumer price index.

“The key would be to control food inflation itself,” Shashanka Bhide—one of the six members of the committee—told the publication. “There is a need for ensuring increasing supplies in the domestic market and to the social safety programs.”

Besides, the “uneven distribution of rainfall spatially and during the monsoon season is a concern,” he added. (We have written about how this year’s high rainfall deficit could worsen inflation here.)

With inflation at high levels, the committee had left rates unchanged in August for a third straight month. It had raised its key lending rates by 250 basis points in May.

The policy tightening “is still working its way through the system and this is expected to maintain downward pressure on core inflation over the next several quarters,” Jayanth Rama Varma, an external member of the committee, told the publication.

An article in the RBI’s monthly bulletin for August had also said inflation could be “well above” the RBI’s comfort level of 6% on account of rising vegetable prices. (We have written about this in a previous edition.)