The price of cooking gas, or LPG, was on Wednesday hiked by a steep Rs 144.5 per cylinder due to a spurt in the benchmark global rates of the fuel.
But to insulate domestic users, the government almost doubled the subsidy it provides on the fuel to keep the per cylinder outgo almost unchanged.
LPG price was increased to Rs 858.50 per 14.2 kg cylinder from Rs 714 previously, according to a price notification from State-owned oil firms.
This is the steepest hike in rates since January 2014, when prices had gone up by Rs 220 per cylinder to Rs 1,241.
Domestic LPG users, who are entitled to buy 12 bottles of 14.2-kg each at subsidised rates in a year, will get more subsidy.
The government subsidy payout to domestic users has been increased from Rs 153.86 per cylinder to Rs 291.48, industry officials said.
For Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries, the subsidy has increased from Rs 174.86 to Rs 312.48 per cylinder.
After accounting for the subsidy that is paid directly into the bank accounts of LPG users, a 14.2-kg cylinder would cost Rs 567.02 for domestic users and Rs 546.02 for PMUY users.
The government gave out eight crore free LPG connections to poor women under PMUY to increase the coverage of environment-friendly fuel in kitchens.
Normally, LPG rates are revised on the 1st of every month but this time it took almost two weeks for the revision to take place -- a phenomenon which industry officials said was due to approvals needed for such a big jump in subsidy outgo.
Others said the decision to defer the increase could have been because of the assembly elections in Delhi.
Delhi went to polls on February 8 and the results were announced on the 11th.