Highlights India imports 85% of its crude oil requirement.  Top three suppliers are Russia, Iraq and Saudi Arabia. Revenue generated from petroleum accounts for 14% of the central tax revenue and 15% of states’ own tax revenue.  Storage capacity of Strategic Petroleum Reserves (SPR) is below global standards. Access to clean cooking fuel is still poor; refill rates of LPG cylinders under the Ujjwala Yojana are low.

The Ministry of Petroleum and Natural Gas (MoPNG) 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 2026-27, and the trends in spending over the last few years.

Overview of finances

In 2026-27, the Ministry has been allocated Rs 30,443 crore, which is a 2% increase over the revised estimates for 2025-26.[i]  This is 0.57% of the total estimated expenditure (Rs 53,47,315 crore) of the government in 2026-27.  The revised estimates for 2025-26 are 54% higher than the budgeted estimates for that year.

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

	2024-25	2025-26 RE	2026-27 BE	% Change
Total	16,962	29,800	30,443	2%
Of which:
LPG Subsidy	15,479	15,121	11,085	-27%
Strategic Oil Reserves	130	1,039	200	-81%
IGGL	612	300	700	133%
Mission Anveshan	50	200	200	0%

Note: RE is revised estimates, BE is budget estimates, % change from 2025-26 RE to 2026-27 BE.  IGGL is Indradhanush Gas Grid Limited – part of North East Natural Gas Pipeline Grid.
Sources: Union Budget Documents 2026-27; PRS.

Allocation towards LPG subsidy includes: Rs 9,200 crore for LPG connections to poor households, and Rs 1,500 crore for Direct benefit Transfer payments to consumers under PAHAL.

Union Budget Announcement 2026-27 The central government announced exemption of central excise duty on compressed biogas (CBG) blended with compressed natural gas (CNG).

In 2026-27, Rs 238 crore will be spent on capital expenditure.  The Standing Committee on Petroleum and Natural Gas (2025) observed unsatisfactory trends with capital expenditure by the Ministry (see figure 1).[ii]  The Committee recommended that the Ministry ensure proper utilisation of the allocated capital budget for exploratory purposes.  In 2025-26, total capital expenditure at the revised stage is expected to be 79% lower (Rs 1,407 crore) than the budget estimate of Rs 6,626 crore.  This is mainly due to reduction in capital expenditure on strategic oil reserves, which was revised down from Rs 5,876 crore to Rs 870 crore.

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