The news of increase in the price of LPG often increases people’s worries. Every month the budget of crores of families depends on how much the gas cylinder will cost. But have you ever wondered that even if gas becomes very expensive in the international market, why the price of domestic gas cylinder in India does not suddenly increase? The answer lies in the financial assistance that the government provides to government oil companies (OMCs).
The government told in the Rajya Sabha that the Central Government is continuously spending thousands of crores of rupees to provide domestic LPG to the people of the country at affordable rates. The government says that if this help was not given, the price of domestic gas cylinder would have been much higher than the current price. This is the reason why despite gas being expensive in the market, its full burden is not passed on to the consumers. According to the answer given in Parliament, the government had given compensation of Rs 22 thousand crore to the oil companies in the year 2022-23. A provision has been made to provide Rs 30,000 crore each for the years 2025-26 and 2026-27.
How much loss do government oil companies suffer?
The government also said that just giving compensation has not been able to cover the entire loss of the oil companies. By June 30, 2026, there had been a total loss (under-recovery) of more than Rs 51 thousand crore on selling domestic LPG to government oil companies. According to the international market, in June 2026, the price of a 14.2 kg domestic gas cylinder had reached Rs 1,695, but the same cylinder was given to the people for Rs 942.
More cheap cylinders for Ujjwala scheme users
That means the government and oil companies bore the burden of more than Rs 700 on one cylinder. Even in July 2026, under-recovery of more than Rs 500 per cylinder continued. The government also said that after more than 10.5 crore beneficiaries of Ujjwala scheme got additional subsidy of Rs 300, the effective price of gas cylinder in Delhi became only Rs 642. The government says that its objective is to maintain regular and affordable supply of gas to every household.
- In 2022-23, the government gave compensation of Rs 22,000 crore to OMCs.
- A provision has been made to provide Rs 30,000 crore each in 2025-26 and 2026-27.
- By June 30, 2026, oil companies had incurred a loss of more than Rs 51 thousand crore on domestic LPG.
How much money does the government give to oil companies (Getty Image)
How is gas cylinder available for Rs 942?
According to the government, the price of LPG had increased rapidly in the international market in June 2026. At that time, the market based price (MDP) of 14.2 kg domestic gas cylinder had reached Rs 1,695. Despite this, only Rs 942 was taken from the consumers. That means the difference of more than Rs 700 on a cylinder was jointly handled by the government and the government oil companies. This is the reason why people are getting gas cylinders at a price much lower than the market price.
How much benefit will the beneficiaries of Ujjwala scheme get?
According to the government, special relief is being given to more than 10.5 crore families of Pradhan Mantri Ujjwala Yojana (PMUY) to provide cooking gas at cheaper rates. These beneficiaries are getting an additional subsidy of Rs 300 on every 14.2 kg LPG cylinder as compared to normal consumers. Apart from this, a large part of the increased price of LPG in the international market is also being borne by the government and the government oil companies themselves.
What is the real price of LPG cylinder? (Getty Image)
This is the reason why while the actual cost of domestic gas cylinder is quite high, the beneficiaries of Ujjwala scheme in Delhi are getting a cylinder for just Rs 642. The government says that this system has reduced the financial burden of cooking gas on crores of poor and low-income families in the era of inflation and has provided relief to them.
Why are oil companies suffering so much loss?
According to the government, the price of domestic LPG is linked to the international market. In the year 2026, due to the West Asia crisis, there was a sharp increase in the international prices of LPG. But the government did not allow its full impact on domestic consumers. Because of this, government oil companies had to sell cylinders at low prices and faced huge under-recovery. By June 30, 2026, this loss had exceeded Rs 51 thousand crores.
What was the impact of the West Asia crisis?
The government told Parliament that India imported about 60% of its LPG requirement and about 90% of that supply came through the Strait of Hormuz. After increasing conflict in West Asia, supplies through this route were affected. After this, the government increased LPG production in the country, started importing from other countries, increased the stock and better managed the supply among the states. The government claims that despite the crisis, the supply of domestic gas has not stopped anywhere in the country. Between March and June 2026, more than 56 crore domestic gas cylinders were distributed, out of which more than 12 crore cylinders were received by Ujjwala families.
Huge fluctuations in crude oil prices
The government said that the prices of Brent crude oil are constantly changing in the international market. On April 30, 2026, the price of one barrel of Brent crude was $ 122.86, which came down to $ 68.17 by July 2, 2026. However, this relief did not last long and on July 22, 2026, the price again increased to $ 94.17 per barrel. The government says that such fluctuations in the international market have a direct impact on India, because the country imports about 88% of its crude oil requirement from abroad. Therefore, changes in global prices also affect the cost of petrol, diesel and LPG.
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