LPG prices have been increased in India with effect from March 1, 2025. This increase can be attributed to the surge in crude oil prices in the international market and the inability to meet the demand for domestic production. The government plans to provide a subsidy of Rs 35,000 crore to compensate oil marketing companies (OMCs) for losses incurred so as to reduce the burden on consumers.
The current price of LPG
From March 2024, the price of domestic LPG cylinder is fixed at Rs 803 per 14.2 kg. However, despite the increase in the cost of raw materials, the oil marketing company has not changed the prices, due to which they have to incur losses. To compensate for this loss, the government has decided to give subsidies.
The impact of the international market
The increase in the price of crude oil in the international market is directly affecting the domestic market. Domestic production is not able to meet the demand, which increases dependence on imports. OMCs are incurring losses due to high cost of imported LPG, which is being attempted to be reduced through subsidies.
Government subsidies and budget 2025
The government has proposed to give a subsidy of Rs 35,000 crore to OMCs in Budget 2025. The subsidy will be disbursed over two financial years. 10,000 crore in 2024-25 and the remaining 25,000 crore in 2025-26. This is aimed at compensating the losses incurred by OMCs so that consumers are not directly affected by the price hike.
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Change in the price of commercial gas cylinders
Before the budget was presented on February 1, 2025, the prices of commercial gas cylinders were reduced by Rs 7. The move was aimed at providing relief to the business community. However, there was no change in the price of domestic LPG then. According to a report by Fitch Ratings, the demand for petroleum products in India may increase by 3% to 4% in the financial year ending March 2025. The main reason for this growth is the increasing demand for consumer, industrial and infrastructure. This is likely to increase the GDP by 6.4 per cent.
What will be the impact on consumers?
The possible increase in LPG prices can affect the household budget. However, the government’s subsidy policy is aimed at mitigating this impact. Consumers are advised to adopt energy conservation measures and consider alternative energy sources so as to reduce fuel expenditure.
The price of a commercial gas cylinder has been increased by Rs 6 from March 1, 2025. The growth is a result of international market conditions and domestic supply challenges. The subsidy policy of the government is an attempt to compensate for the losses of OMCs and reduce the burden on consumers. In the future, considering the increase in energy demand and the volatility of the global market, consumers and policymakers will have to remain vigilant and consider long-term strategies for energy security.
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