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Modi Government Approves ₹300 Billion Boost for Affordable LPG Scheme: Relief for Millions of Households

Swarnadwip Nath Published Aug 08, 2025, 05:09 PM Updated Sep 18, 2026, 11:56 AM

In a major policy move aimed at shielding vulnerable households from rising energy costs, the Union Cabinet has approved ₹300 billion (₹30,000 crore) in budgetary support for India’s affordable LPG scheme. The announcement was made on August 8, 2025, by Union Information Minister Ashwini Vaishnaw, marking a significant expansion of the government’s commitment to clean cooking fuel access under the Pradhan Mantri Ujjwala Yojana (PMUY).

Key Highlights

- ₹300 billion approved to support affordable LPG access for households

- Budgetary support to oil marketing companies to offset under-recoveries

- Scheme aims to stabilize LPG prices amid global energy volatility

- Over 10 crore PMUY beneficiaries to benefit from continued subsidies

Financial Support to Oil Marketing Companies

The ₹300 billion allocation will be disbursed to oil marketing companies (OMCs) to compensate for under-recoveries incurred while supplying LPG cylinders at subsidized rates. This move comes amid a volatile global energy landscape, with crude oil prices fluctuating due to geopolitical tensions and supply chain disruptions.

- The support will help OMCs maintain consistent supply without passing on price hikes to consumers.

- It ensures that the subsidy mechanism remains viable and transparent.

- The funds will be used to cover the gap between international LPG prices and domestic retail prices.

Continuation of ₹300 Subsidy Per Cylinder

The Cabinet has also extended the ₹300 per cylinder subsidy for PMUY beneficiaries until March 2026, reinforcing the government’s commitment to affordable energy access.

- Each eligible household will receive subsidies on up to 12 cylinders annually.

- The subsidy will be directly transferred to beneficiaries’ bank accounts.

- The effective price of a 14.2 kg LPG cylinder for PMUY users remains around ₹603 in Delhi, significantly below market rates.

Impact on Households and Consumption Patterns

The scheme has already shown measurable impact on LPG adoption and usage among low-income households.

- Average annual LPG consumption among PMUY beneficiaries has risen from 3.01 refills in FY20 to 3.87 refills in FY24.

- The subsidy has helped reduce indoor air pollution and health risks associated with traditional cooking fuels.

- Women in rural and semi-urban areas have reported improved quality of life and time savings due to LPG access.

Strategic Rationale Behind the Move

The decision to approve ₹300 billion in support is rooted in both economic and social considerations.

- India imports nearly 60% of its LPG requirements, making it vulnerable to global price shocks.

- The government aims to ensure sustained usage of LPG by shielding consumers from price volatility.

- The move aligns with India’s broader energy transition goals and its commitment to SDG 7 (Affordable and Clean Energy).

Political and Economic Implications

With general elections approaching in 2026, the expansion of the LPG subsidy scheme is expected to resonate strongly with rural and low-income voters.

- The scheme reinforces the Modi government’s pro-poor image and welfare credentials.

- Economists view the move as fiscally prudent, given the targeted nature of the subsidy.

- The decision also helps contain inflationary pressures by stabilizing household energy costs.

Conclusion

The Cabinet’s approval of ₹300 billion for affordable LPG access marks a decisive step in India’s energy equity journey. By extending financial support to oil marketing companies and continuing direct subsidies to households, the government is ensuring that clean cooking fuel remains within reach for millions—even amid global uncertainty.

Sources: Economic Times, News18, India TV News

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