The Modi government raised prices of domestic cooking gas by ₹50 per cylinder from Tuesday to cushion public sector oil marketing companies from under recoveries, at a time international crude oil prices slumped to a four-year low as fears of a Trump-tariff induced US recession gripped the global financial markets.
The price of the 14.2 kg cylinder for the domestic consumers in Calcutta will rise to ₹879 following the hike announced by Union petroleum minister Hardeep Singh Puri, who pointed towards widening losses incurred by OMCs on account of LPG. He added that cylinders under the Ujjwala scheme, which provides subsidised cylinders for economically weaker sections, will go up by ₹50 a cylinder.
This is the first change in LPG prices after nearly 13 months in India. The government had cut the prices by ₹100 a cylinder to ₹829 on March 9, 2024 and held the price since then till Monday.
In a press conference in Delhi, minister Puri claimed that the cumulative under-recovery (the difference between the market price and desired retail price of the OMCs) for LPG in FY25 stood at ₹41,388 crore, adding that the hike announced on Monday would only take care of the under recoveries in the ongoing fiscal.
The average Saudi CP — the international benchmark used for LPG pricing since India is majorly import-dependent to meet its needs — has risen 63 per cent to $629 per tonne in February 2025 from $385 in July 2023.
While the LPG prices were hiked, the government also increased the excise duty on petrol and diesel by ₹2 per litre. However, the consumers will not feel the pinch as OMCs decided to absorb the duty.
The Centre is expected to collect close to ₹32,000 crore and ₹5,000 crore additionally from revised excise duty and LPG prices, respectively, and the resource mobilised is likely to pay for the under recoveries being faced by OMCs on account of LPG.
The minister said the government would consider favourably to compensate for the under recoveries incurred by the OMCs in FY25. Between FY 2021-23, the OMCs had claimed under recovery of ₹28,000 crore and the Centre compensated them with assistance of ₹22,000 crore.
The excise duty collected by the Centre will go to the Consolidated Fund of India. In the past, the OMCs were supported from this fund. Apart from LPG, prices of green fuel CNG was also raised by ₹1 per kg to mobilise resources.
The rejig in petroleum products prices came at a time benchmark Brent is trading at $64.86 a barrel, a four-year low. Minister Puri argued that OMCs are holding an inventory of 45 days with an average price above ₹75 a barrel.
If the prices remain soft for some more time, there will be a ‘headroom’ to cut retail fuel prices, Puri argued but declined to give any “assurance”. Price of the Indian basket of crude stood at $69.94 a barrel on April 4. India imports 85 per cent of its domestic petroleum requirement. He also argued that LPG prices would be considered for a revision in a month or so, adding that prices of cooking gas in India continue to be cheaper than other countries in the sub continent.
The Opposition was quick to point out that the Modi government was unwilling to pass on the benefit of a lower oil price to Indian consumers.
Mallikarjun Kharge of the Congress pointed out that crude prices have fallen 41 per cent from 2014 (when the BJP came to power) but the Modi government increased duty by ₹2 a litre instead of passing on the benefit.
The Aam Aadmi Party described the ₹50 LPG price hike as another attack on the common man who is forced to run his household by cutting down on food due to inflation.