In a move that has sparked considerable debate, the Indian government has increased the price of domestic liquefied petroleum gas (LPG) by Rs 29 per cylinder. Following the revision, consumers in Delhi will now pay Rs 942 for a 14.2-kg LPG cylinder. The hike comes in the wake of sharp rises in global energy prices, particularly due to disruptions in West Asia. Officials from the Centre argue that, despite the increase, Indian consumers are still paying considerably less than many of their international counterparts.

Explaining the Price Dynamics

The Centre laid out its rationale, asserting that even after the latest adjustment, households across India continue to benefit from a significant subsidy that shields them from the full impact of rising international costs. Currently, it is estimated that the government bears an under-recovery of about Rs 700 on each domestic cylinder. The statement from the government highlighted that India imports roughly 60 per cent of its LPG and domestic prices are connected to international benchmarks, primarily influenced by the cost trends in the Saudi market.

As of June 2026, the cost of supplying a domestic LPG cylinder has reportedly crossed Rs 1,600. The government indicated that the blended LPG benchmark has surged approximately 46 per cent since February, when it was last stable at US$542.5 per tonne. This sharp increase is attributed to disruptions in shipping routes through the Strait of Hormuz.

In light of these circumstances, officials emphasised that Indian consumers are still enjoying some of the lowest LPG prices globally. For context, they noted that the effective price for a Ujjwala beneficiary is Rs 642, far lower than comparable charges in neighbouring countries such as Pakistan, where the price is around Rs 1,046, and Bangladesh, where it stands at Rs 1,225.

Impact on Consumers and Subsidy Programmes

Moreover, the government’s defence included a breakdown of the pricing structure for beneficiaries of the Pradhan Mantri Ujjwala Yojana. Under the scheme, eligible households benefit from a subsidy of Rs 300 on the first four refills annually. This, they argue, further distinguishes the pricing for Ujjwala participants versus general consumers. While a non-beneficiary will pay Rs 942, the Ujjwala beneficiary’s effective price stands at Rs 642, representing a substantial difference in cost.

Despite the price hikes, the government has assured that it will continue to absorb most of the rising costs. By citing the substantial under-recovery borne by public sector oil companies, the government aims to reiterate its commitment to maintaining affordable LPG prices. The most recent increase marks a cumulative rise of Rs 89 over three months, indicating continued economic pressures in the sector.

While consumers express concern over the price rises, officials maintain that the situation is being handled judiciously, ensuring a steady supply of LPG for households across the country. The government claims to be prioritising the distribution of LPG for critical services such as hospitals, amidst the ongoing international crisis.

Further Measures and Economic Burden

The government has implemented various measures to ensure that LPG continues to be available despite global volatility. They have expanded sourcing to include alternative suppliers from countries like the US, Canada, and Algeria, aiming to reduce dependency on the Strait of Hormuz, which is vital for LNG transportation.

Notably, public sector oil firms have absorbed a significant part of the increase in international costs, accumulating a burden of Rs 60,000 crore by the end of the last financial year. In response to this financial strain, the Union Cabinet has approved Rs 30,000 crore in compensation for these companies. Such actions indicate a multi-faceted approach to managing both domestic pricing while addressing international supply chain challenges.

Despite ongoing criticisms, the government insists that Indian households enjoy some of the most competitive LPG prices in the world, a claim it will continue to defend amid potential future economic fluctuations.

Long or Short, get news the way you like. No ads. No redirections. Download Newspin and Stay Alert, The CSR Journal Mobile app, for fast, crisp, clean updates!

App Store –  https://apps.apple.com/in/app/newspin/id6746449540 

Google Play Store – https://play.google.com/store/apps/details?id=com.inventifweb.newspin&pcampaignid=web_share