LPG: Ujjwala households get ₹300 per cylinder on four refills a year

LPG pricing and the Ujjwala subsidy: what happened?

India imports a large part of its LPG, and the import cost follows the Saudi Contract Price. When the Strait of Hormuz was disrupted in late February 2026, that price jumped. The Government did not pass the full rise to households. This note explains who carries the gap.

• The domestic cylinder price was revised to ₹942 for general consumers in Delhi; Ujjwala households pay an effective ₹642 after the ₹300 DBT.
• Commercial 19 kg cylinders are revised monthly as a direct pass-through; the Delhi price is ₹3,113.50 after five increases.
• Domestic LPG production was raised by more than 60%, from about 32 TMT to about 52 TMT.
• Supplies were widened to the United States, Canada and Algeria; OTP-based delivery checks rose to about 90 per cent to stop diversion.
• About 54 per cent of India’s LPG consumption had been routed through the Strait of Hormuz.

What is the difference between under-recovery and subsidy?

• Under-recovery: the gap between the international cost of LPG and the regulated retail price. Public sector oil marketing companies absorb it, and the exchequer compensates them in part.
• Subsidy: money paid over and above that, directly into the bank account of the beneficiary. For PMUY it is ₹300 a cylinder for the first four refills a year.
• So even a non-PMUY household pays about ₹700 below the market-linked cost.

What is the Saudi Contract Price?

• A monthly benchmark set by Saudi Aramco for propane and butane. India’s LPG is a 50:50 propane-butane blend, so the landed import cost tracks this price.

How did the import benchmark move?

How does India’s price compare with neighbours?

Why does LPG pricing and the Ujjwala subsidy matter?

What are the challenges in LPG pricing and the Ujjwala subsidy?

• The under-recovery burden on oil companies and the exchequer keeps rising while the benchmark stays high.
• Only four refills are subsidised; heavier users pay ₹942 for the rest.
• Dependence on one sea route for over half of LPG use is a structural risk.

What should be done next on LPG pricing and the Ujjwala subsidy?

• Keep diversifying LPG sources away from a single choke point.
• Expand piped natural gas where available, as the Ministry urged.
• Keep subsidy targeted through DBT and OTP verification.

What can Prelims ask on LPG pricing and the Ujjwala subsidy?

• PMUY: ₹300 per cylinder for the first four refills a year; more than 10.58 crore connections.
• Delhi price ₹942; effective PMUY price ₹642; supply cost over ₹1,600.
• Saudi CP (50:50 blend) rose about 46% from February to June 2026.
• Under-recovery is borne by oil marketing companies; subsidy is DBT to the consumer.

How to write about LPG pricing and the Ujjwala subsidy in Mains

Practice question (10 marks, 150 words): Distinguish between under-recovery and subsidy in domestic LPG pricing. How did India protect households during the 2026 Hormuz disruption?

• Define both with the release figures.
• Show the benchmark rise and the ₹1,600 cost.
• Supply steps: domestic output, new sources, PNG shift.
• Fiscal cost: ₹60,000 crore, ₹30,000 crore compensation.
• Conclude: targeted relief vs long-run energy security.