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Fueling Affordable Cooking: India’s ₹42,060 Crore Subsidy Shakeup

Swarnadwip Nath Published Aug 15, 2025, 10:07 PM Updated Sep 16, 2026, 09:01 AM

Key Highlights The Union Cabinet has approved a sweeping ₹42,060 crore (₹420.6 billion) subsidy package for fiscal 2025-26 to make domestic LPG (cooking gas) more affordable for Indian families, especially low-income households. The decision ensures ongoing support to over 330 milli...

Key Highlights

The Union Cabinet has approved a sweeping ₹42,060 crore (₹420.6 billion) subsidy package for fiscal 2025-26 to make domestic LPG (cooking gas) more affordable for Indian families, especially low-income households.
The decision ensures ongoing support to over 330 million Indian households, including 103 million beneficiaries from the Pradhan Mantri Ujjwala Yojana (PMUY).
The subsidy shields families from high global LPG prices, supports public sector oil companies, and sustains the government’s mission for universal clean cooking access.

Subsidy Structure and Beneficiaries

The outlay covers two main components:

₹30,000 crore is allocated as compensation to public-sector Oil Marketing Companies (IOCL, BPCL, HPCL), helping them bear losses from selling cooking gas below market cost.
₹12,060 crore continues the targeted subsidy for PMUY beneficiaries, providing a direct benefit of ₹300 per 14.2 kg LPG cylinder for up to nine refills per year in 2025-26.
The smaller 5 kg cylinder option also qualifies for proportionate subsidy.
This means Ujjwala families pay just around ₹553 per 14.2 kg cylinder in Delhi, well below retail rates—making clean energy accessible to the poorest households nationwide.

Impact on Households and the Economy

The government’s subsidy, combined with a steady retail price of roughly ₹853 per 14.2 kg domestic cylinder in major cities, has protected millions from international price shocks and inflation.

India imports nearly 60% of its LPG requirement. The combination of fiscal support and subsidies keeps domestic kitchen budgets stable, even as global energy markets fluctuate.

PMUY’s coverage and sustained refill rates (now about 4.47 refills/household/year) underscore rising clean energy adoption in rural and previously underserved regions.

Industry Relief and Market Stability

Oil marketing companies receive the subsidy in 12 tranches, supporting ongoing LPG supply and helping them manage the cost gap between global and domestic prices.

Policy continuity also enables OMCs to maintain investment in infrastructure, secure crude imports, and ensure uninterrupted service.

A Model for Targeted Welfare and Inclusive Growth

Since 2016, PMUY has led to the addition of over 10 crore deposit-free LPG connections for poor, primarily women-led households.

The new subsidy package maintains this momentum, combining direct support for the vulnerable with back-end help for industry.

As refills become more affordable, LPG continues to displace polluting fuels—bolstering health, women’s empowerment, and environmental goals.

Source: Hindustan Times, Press Information Bureau, NDTV, Economic Times, Republic World, Argus Media

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