New Delhi, May 4 -- Split pricing has its benefits. If something is sold to price-insensitive customers at a steep mark-up, then overall utility can be maximized if the extra charge allows price reduction for others.

This idea works best when consumption is easily divided. Aviation turbine fuel goes right into aircraft, for example, while its far cheaper (and less refined) version kerosene is often sold loose.

Liquefied petroleum gas (LPG), however, is hard to apportion neatly. By policy, India keeps its supply for household kitchens cheap, but its sale as a commercial fuel expensive. On Friday, state-run oil companies hiked the latter's price by almost 50% to make up for a surge in the import cost of hydrocarbons from which LPG is deri...