UPSC Prelims Practice Questions — OMCs losing ₹30,000 crore a month on petrol, diesel, LPG

Q1. Among India's Public Sector Oil Marketing Companies that received the Union Cabinet-approved Rs 30,000 crore LPG under-recovery compensation in August 2025, which one is the largest by refining capacity and retail outlet network?

  • A. Bharat Petroleum Corporation Limited (BPCL)
  • B. Hindustan Petroleum Corporation Limited (HPCL)
  • C. Indian Oil Corporation Limited (IOCL)
  • D. Mangalore Refinery and Petrochemicals Limited (MRPL)

Q2. In the context of India's petroleum sector, the term 'under-recovery' incurred by Oil Marketing Companies on the sale of petrol, diesel or LPG most accurately refers to which one of the following?

  • A. The difference between the trade/import-parity price of the product and the controlled retail selling price at which the OMC is required to sell it
  • B. The accounting net loss reported by the OMC in its audited annual profit and loss statement after factoring in marketing margins
  • C. The shortfall between the budgeted petroleum subsidy and the actual fiscal subsidy released by the Government of India in a given year
  • D. The customs duty foregone by the Government on crude oil imports made by public sector refiners for domestic supply

Q3. Which of the following bodies is the attached office of the Government of India that monitors petroleum product prices, administers the domestic LPG and PMUY subsidy schemes, and provides pricing and policy inputs on under-recoveries of Oil Marketing Companies?

  • A. Directorate General of Hydrocarbons (DGH)
  • B. Petroleum and Natural Gas Regulatory Board (PNGRB)
  • C. Oil Industry Development Board (OIDB)
  • D. Petroleum Planning and Analysis Cell (PPAC)

Q4. With reference to the Union Cabinet decisions of August 2025 concerning Public Sector Oil Marketing Companies and domestic LPG, consider the following statements: 1. The Rs 30,000 crore compensation to OMCs will be released in twelve tranches. 2. The targeted subsidy under the Pradhan Mantri Ujjwala Yojana for FY 2025-26 is Rs 300 per 14.2 kg cylinder for up to nine refills per beneficiary. 3. The Rs 30,000 crore compensation has been approved exclusively for under-recoveries on petrol and diesel, and not for domestic LPG. 4. The total outlay approved for the PMUY targeted subsidy for FY 2025-26 is Rs 12,000 crore. Which of the statements given above is/are correct?

  1. The Rs 30,000 crore compensation to OMCs will be released in twelve tranches.
  2. The targeted subsidy under PMUY for FY 2025-26 is Rs 300 per 14.2 kg cylinder for up to nine refills per beneficiary.
  3. The Rs 30,000 crore compensation has been approved exclusively for under-recoveries on petrol and diesel, and not for domestic LPG.
  4. The total outlay approved for the PMUY targeted subsidy for FY 2025-26 is Rs 12,000 crore.
  • A. 1, 2 and 4 only
  • B. 2 and 3 only
  • C. 1, 3 and 4 only
  • D. 1, 2, 3 and 4