Union Budget 2025: Anticipation is high for Budget 2025, which will be presented by Finance Minister Nirmala Sitharaman on February 1. Many stakeholders have expressed their expectations, and various sector leaders have submitted their requests to the government. It is anticipated that the government may address the Oil Ministry’s demands in this budget.
Indian Oil has incurred a loss of Rs 9,000 crore!
The announcement of subsidies for LPG cylinders has historically resulted in financial losses for oil companies. The Oil Ministry reports that Indian Oil has incurred a loss of Rs 9,000 crore due to selling LPG cylinders at prices below production costs. The Oil Ministry is seeking Rs 40,000 crore to cover the LPG subsidy provided by the government.
Finance Minister to allocate Rs 40,000 crore?
In a gesture to mark International Women’s Day on March 8, 2024, the price of domestic LPG cylinders was reduced by Rs 100. It is expected that the Finance Minister may allocate Rs 40,000 crore to the Oil Ministry in this budget. When government-owned oil companies sell LPG cylinders at a loss, they face significant financial challenges, which are typically offset by government support. For the fiscal year 2022-23, the government allocated Rs 22,000 crore to oil companies to compensate for their losses. The primary suppliers of LPG cylinders include Indian Oil Corporation, BPCL, and HPCL.
The government imposes a 5% GST on LPG cylinders. Should the Oil Ministry’s requests be granted, it could lead to benefits for the general public. Additionally, there is potential for a reduction in domestic LPG cylinder prices in the future. The Confederation of Indian Industry (CII) has called for a decrease in excise duty to alleviate the financial burden on citizens. Excise duty is currently applied to petrol and diesel, and meeting this demand could result in lower prices for these fuels, providing relief to the public.