Cabinet Clears ₹30,000 Crore Compensation for OMC Losses on Domestic LPG

Speedy Summary

• The Union Cabinet approved a compensation of ₹30,000 crore for three public sector Oil Marketing Companies (OMCs)-Indian Oil Corporation, Bharat Petroleum, and Hindustan Petroleum-for losses incurred in selling domestic LPG.
• The compensation will be distributed in 12 tranches by the Ministry of Petroleum and Natural gas.
• This financial support aims to ensure uninterrupted supply of LPG cylinders by enabling OMCs to procure crude oil/LPG, service debts, and sustain capital expenditure.
• A ₹12,000 crore subsidy under the Pradhan Mantri Ujjwala yojana (PMUY) was also approved for FY 2025-26.

– This subsidy provides ₹300 per 14.2 kg cylinder (up to nine refills annually) or proportionate amounts for smaller cylinders to PMUY beneficiaries.
– The scheme currently benefits approximately 10.33 crore households across India.
– PMUY was launched in May 2016 to deliver free LPG connections to women from economically weaker sections.

• India meets about 60% of its LPG requirement through imports.

Indian Opinion Analysis

The Union Cabinet’s decision reflects an ongoing commitment to balance economic relief with expanding welfare schemes amid rising global energy prices. By compensating public sector OMCs directly with ₹30,000 crore, the government ensures continued availability of domestic cooking gas while easing financial pressure on these key players within India’s energy ecosystem.

Together, approving a ample ₹12,000 crore subsidy under PMUY indicates that household access to affordable clean cooking fuel remains a policy priority despite fiscal constraints. With over 10.33 crore households depending on this welfare initiative-and as nearly two-thirds of India’s LPG demand is met via imports-the twin measures aim not just at sustaining current LPG use but also at mitigating external price vulnerabilities.

While beneficial for short-term stability and social welfare goals like encouraging clean fuel adoption among rural poor women, these allocations underline india’s trade-offs between subsidies-driven domestic affordability versus broader fiscal discipline strategy over time.

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