Govt Approves ₹30,000 Crore LPG Subsidy to Support Oil PSUs

New Delhi: The Government has approved a massive compensation package of ₹30,000 crore for the 2025-26 fiscal year to support state-run oil companies. Minister of State for Petroleum and Natural Gas, Suresh Gopi, informed the Lok Sabha on Thursday that this funding will compensate Indian Oil, Bharat Petroleum, and Hindustan Petroleum for supplying LPG at subsidized rates.

Lowering Costs for PMUY Consumers

Currently, a standard 14.2 kg domestic LPG cylinder retails for ₹913 in Delhi. However, through the Pradhan Mantri Ujjwala Yojana (PMUY), the Centre provides a targeted subsidy of ₹300 per cylinder. This intervention ensures that poor consumers receive their gas at an effective price of ₹613 per cylinder.

Strategic Measures Amid Regional Conflict

To counter supply chain disruptions caused by the ongoing Iran war, the Ministry has taken several proactive steps:

• Production Mandate: Under the Essential Commodities Act, all domestic refineries must now channel C3 and C4 streams exclusively toward LPG production for public sector companies.

• Strategic Reserves: The Indian Strategic Petroleum Reserve Limited (ISPRL) has established facilities with a capacity of 5.33 Million Metric Tonnes (MMT) of crude oil to safeguard the nation against sudden supply shocks.

Petrol and Diesel Price Stability

While petrol and diesel prices remain market-determined, the Minister highlighted the government’s role in fiscal intervention. Key points mentioned include:

• Excise Duty History: The Centre reduced excise duties by ₹13/litre on petrol and ₹16/litre on diesel between 2021 and 2022.

• Tax Calibration: In April 2025, when the government increased excise duty by ₹2 per litre, Oil Marketing Companies (OMCs) did not pass this cost to consumers, absorbing the burden to maintain price stability.

The Minister reaffirmed that the government will continue to calibrate tax structures whenever necessary to reduce the financial burden on the Indian public.