The Cabinet is likely to approve cash compensation for a large part of the underrecoveries incurred by OMCs.In FY25 alone, the three state-owned refiners notched up losses of over ₹41,000 crore on LPG cylinders sold at below the cost price, while in FY26 too, the under recoveries are ongoing.The government had raised domestic LPG cylinder price by ₹50 in April, but beyond that, OMCs are still likely to be incurring an ongoing loss of less than ₹200 per cylinder.
It is also likely that the cash compensation will be in tranches, rather than the OMCs having to wait till the end of the financial year for one big amount of over ₹30,000 crore to be released.If this proposal is approved, it is likely that the first tranche could reflect in the first Supplementary Demands for Grants during the Winter Session of the Parliament or maybe even earlier, with the rest reflecting in the revised estimates of the budget.In April, sources had indicated that a ₹32,000 crore approval would be sought as cash compensation for OMCs as the government had increased the excise duty on petrol, diesel by ₹2 each. Whether this logic of compensating OMCs through the excise hike still holds good will be known.In addition, the Cabinet is also likely to okay the release of subsidies for the PM Ujwala Scheme, the allocation for which is already part of the FY26 budget estimates.First Published: Aug 8, 2025 11:36 AM IST
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