In a move that could directly impact millions of households across India, the Union Cabinet is expected to approve a massive ₹30,000 crore support package for oil marketing companies (OMCs) to help maintain stable domestic LPG prices.
According to government sources quoted by Business Today, the proposal will be discussed at the Cabinet meeting scheduled for 1 PM today. While the official announcement will only come after the meeting, sources say the green light is almost certain.
If approved, this will be one of the largest direct financial support packages to OMCs in recent years, aiming to shield both the companies and consumers from the turbulence of international energy markets.
Why This Matters to You
Liquefied Petroleum Gas (LPG) is a household essential for cooking in most Indian homes. With over 30 crore active LPG connections in the country, any fluctuation in prices has a direct impact on household budgets — especially in rural and low-income urban households.
Over the past year, global crude oil and LPG prices have been highly volatile due to a mix of geopolitical tensions, supply chain disruptions, and fluctuating demand. This has put oil companies like Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) under financial strain.
The losses from selling domestic LPG cylinders at below-market prices have piled up, prompting the need for government intervention.
The ₹30,000 Crore Plan
The proposed package is essentially a subsidy reimbursement for OMCs. Here’s how it is expected to work:
- Purpose: Compensate oil companies for the gap between their selling price and the actual cost of procuring LPG from global suppliers.
- Outcome: Keep retail LPG prices steady for consumers, avoiding sudden hikes.
- Timing: Approval likely today, with immediate effect on OMC financials.
While there is no official confirmation yet, insiders suggest that the government has already done the groundwork for this approval, and it is unlikely to face resistance within the Cabinet.
A Relief for Households
For the average Indian family, an LPG price hike of even ₹50 can strain the monthly budget. In the past, sudden jumps in cylinder prices have triggered public outcry and political backlash.
Currently, the 14.2 kg domestic LPG cylinder in most parts of the country costs around ₹903 (Delhi price), although the rate varies by city. Without government support, oil companies might be forced to increase these prices significantly to recover their losses — something the government clearly wants to avoid, especially with key state elections around the corner.
The Bigger Picture — Global Energy Crisis
The global energy market has been in turmoil since 2022, when the Russia-Ukraine war disrupted fuel supplies and pushed up prices. In addition, supply chain bottlenecks, refinery issues, and fluctuating demand from major economies like China have kept prices unstable.
For India, which imports over 50% of its LPG needs, this means domestic prices are highly sensitive to international trends. When global prices rise sharply, Indian OMCs either absorb the losses or get compensated by the government.
This ₹30,000 crore package is essentially a way for the government to say: We’ll take the hit, so you (the consumer) don’t have to.
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Past Interventions
This isn’t the first time the government has stepped in to protect LPG consumers. In 2022, the government announced a one-time ₹22,000 crore payment to OMCs to offset losses from domestic LPG sales.
Additionally, schemes like the Pradhan Mantri Ujjwala Yojana have provided targeted subsidies to low-income households, ensuring access to clean cooking fuel.
However, industry experts say that this time, the scale of support is larger because the global price volatility has been more prolonged.
Why the Timing Matters
The expected approval comes just months before several state elections and ahead of the Union Budget. Analysts believe the government is keen to avoid any fuel price shocks that could cause public discontent.
Also, with inflation already putting pressure on household budgets, keeping cooking gas affordable is seen as a politically and economically smart move.
What Experts Say
Industry analysts believe this subsidy will not only help consumers but also strengthen the financial health of OMCs.
“This support will improve the cash flow situation for oil companies, enabling them to invest in infrastructure and supply chain improvements,” said an energy sector expert, requesting anonymity.
However, some economists caution that repeated subsidies could put pressure on the government’s fiscal deficit, which is already under strain from other welfare and infrastructure spending.
The Road Ahead
Once the Cabinet gives its nod — likely later today — the Finance Ministry will release the funds in a phased manner. Oil companies will be reimbursed based on the actual sales data of domestic LPG cylinders and the cost gap incurred.
For consumers, this means no immediate change in the price of LPG cylinders. But if global prices remain high for too long, the government may have to consider further interventions.
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Key Points to Remember
- ₹30,000 crore support package for oil marketing companies.
- Goal: Stabilise domestic LPG prices.
- Meeting: Union Cabinet at 1 PM today.
- Impact: Relief for millions of LPG consumers.
- Reason: High global prices and OMC losses.
- Past precedent: Similar ₹22,000 crore package in 2022.
Final Word
If the Cabinet clears this proposal as expected, it will be a big win for both households and oil companies. Consumers can continue cooking without worrying about sudden price shocks, while OMCs will get much-needed breathing space to recover from losses.
More clarity will emerge after the official announcement later today — but for now, all signs point to a massive ₹30,000 crore lifeline aimed at keeping your LPG cylinder price right where it is.
