The Ministry of Petroleum and Natural Gas is concerned with exploration and production of oil and natural gas, refining, distribution and marketing, import and export, and conservation of petroleum products.  This note looks at the proposed expenditure of the Ministry for 2025-26, and the trends in spending over the last few years.

Overview of finances[i]

In 2025-26, the Ministry has been allocated Rs 19,327 crore, which is an 11% increase over the revised estimates for 2024-25.  This is 0.38% of the total estimated expenditure (Rs 50,65,345 crore) of the government in 2025-26.

Table 1: Allocation for the Ministry of Petroleum and Natural Gas (in Rs crore)

Major Heads	Actual 2023-24	Budget 2024-25	Revised 2024-25	Budget 2025-26
LPG Subsidy	12,240	11,925	14,700	12,100
Strategic Oil Reserves	153	628	130	5,876
IGGL (North East Natural Gas Pipeline Grid)	1,043	1,000	612	700
Mission Anveshan	-	332	50	592
Others	1,045	2,045	2,006	338
Total	14,328	15,930	17,368	19,327

Note: SOR – Strategic Oil Reserves; OMC – Oil Marketing Company; IGGL – Indradhanush Gas Grid Limited.

Sources: Union Budget Documents 2024-25; PRS.

Historically, the Ministry’s expenditure trend has followed the trend in global crude oil prices (see Figure 1).  India imports about 85% of its crude oil requirement.[ii]  When global oil prices rose, the government limited the price rise in India to protect consumers.  The loss to oil marketing companies (OMCs) was partly compensated by the central government.  To offset the losses, the government issued oil bonds to OMCs in lieu of cash subsidies from 2002. As of February 2023, the outstanding value of the oil bonds is Rs 92,200 crore (Rs 1,06,933 crore including interest).  All the bonds will mature by April 2026 (See Table 7 in Annexure).[iii]  

In 2025-26, Rs 12,100 crore has been allocated for the LPG subsidy.  This includes allocation towards Direct Benefit Transfer for LPG (PAHAL) and LPG connections to poor households (Pradhan Mantri Ujjwala Yojana).¹