Cabinet clears ₹12,000-cr targeted LPG subsidy for Ujjwala consumers in 2025-26; ₹30,000-cr compensation to OMCs

The Union Cabinet on Friday approved the continuation of targeted LPG subsidy for Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries for the financial year 2025-26 at an expenditure of ₹12,000 crore, while also sanctioning ₹30,000 crore as compensation to public sector oil marketing companies for under-recoveries on sale of domestic LPG.

The decision will benefit 10.33 crore households across the country, ensuring affordable cooking gas for low-income families, an official statement said.

Launched in May 2016, PMUY provides deposit-free LPG connections to adult women from poor households, including free first refill and stove under Ujjwala 2.0. India imports about 60% of its LPG requirement.

As per the existing modalities of Ujjwala 2.0, the first refill and stove is also provided free of cost to all beneficiaries.

PMUY beneficiaries are not required to make any payments for the LPG connection or the first refill or stove.

The government started with a targeted subsidy of ₹200 per 14.2 kg cylinder for up to 12 refills per annum, proportionately pro-rated for 5 kg connections, in May 2022 and later increased it to ₹300 per 14.2 kg cylinder.

The total expenditure on the PM Ujjwala scheme till 2024-25 is estimated at around ₹52,000 crore.

The Cabinet also cleared ₹30,000 crore compensation to Indian Oil Corporation Ltd (IOCL), Bharat Petroleum Corporation Ltd (BPCL) and Hindustan Petroleum Corporation Ltd (HPCL) for losses incurred in supplying domestic LPG at regulated prices during 2024-25.

The compensation, to be paid in 12 tranches, will help the state-run fuel retailers meet critical requirements such as crude and LPG procurement, debt servicing and capital expenditure, according to an official readout.

The international prices of LPG remained at high levels during 2024-25 and continue to remain high.

"However, to insulate consumers from fluctuations in international LPG prices, the increase in cost was not passed on to consumers of domestic LPG which led to significant losses for the three OMCs," a government release stated.