Even as global LPG prices have surged in recent months, Indian households have been largely shielded from the increase, with the government and state-owned oil companies absorbing a significant portion of the cost, government sources told India Today.
According to data shared by government sources, the estimated cost of supplying a domestic cylinder is currently around Rs 1,200. However, households covered under the Pradhan Mantri Ujjwala Yojana (PMUY) are paying just Rs 613 per cylinder after subsidy support.
This means nearly Rs 587 per cylinder is being absorbed through a combination of government support and under-recoveries borne by oil marketing companies (OMCs).
The figures come at a time when global LPG prices have risen sharply due to supply disruptions in the Gulf region and tensions around the Strait of Hormuz, a key route for global energy shipments.
Despite these pressures, domestic LPG prices for households have remained unchanged.
Government sources said the cost of LPG supply has increased by nearly two-fifths over the past few months as international benchmark prices climbed.
The Saudi Contract Price (CP) for propane, which serves as the benchmark for India’s LPG imports, rose from $525 per tonne in January to $750 per tonne in April.
The sharp increase in global prices has put pressure on India’s fuel subsidy system because the country imports a significant portion of its LPG requirements.
Yet consumers have largely been protected from the increase.
According to the data, even households that do not receive Ujjwala support continue to pay less than the actual supply cost.
The price of a domestic LPG cylinder for general consumers stands at around Rs 913, well below the estimated supply cost of Rs 1,200.
The gap between the market cost and the retail selling price has resulted in mounting under-recoveries for oil marketing companies.
Government sources told India Today that OMCs faced domestic LPG under-recoveries of Rs 41,338 crore during FY25.
The situation is expected to become even more challenging this year.
For FY26, under-recoveries are estimated to rise to around Rs 60,000 crore following the recent increase in international LPG prices.
To ease some of the burden, government compensation to oil marketing companies for FY26 is projected at around Rs 30,000 crore, according to the data.
The figures also highlight how Indian LPG prices compare with neighbouring countries.
According to the data shared with India Today, households in Sri Lanka pay around Rs 1,241 for an LPG cylinder, while prices are around Rs 1,207 in Nepal and Rs 1,046 in Pakistan.
In comparison, Indian households pay around Rs 913 for a domestic LPG cylinder, while beneficiaries under the Ujjwala scheme pay only Rs 613.
Government sources said this makes both subsidised and unsubsidised LPG prices in India lower than those prevailing in neighbouring countries despite the recent rise in global supply costs.
The data also underlines the scale of the Ujjwala programme.
Since its launch in 2016, more than 10 crore households have received LPG connections under the scheme. The programme was launched with the aim of expanding access to clean cooking fuel, particularly among low-income households.
The latest figures suggest that the government continues to prioritise shielding households from international price shocks, even as oil companies face growing under-recoveries and global LPG markets remain volatile.
With international benchmark prices still elevated, the challenge for policymakers will be balancing consumer affordability with the financial burden being carried by oil marketing companies.