Fuel Price Freeze, Fiscal Burden, and the OMC Stress Cycle: A Case-Cum-Research Study of India’s Under-Recovery Regime in FY2025–26
Fuel Price Freeze, Fiscal Burden, and the OMC Stress Cycle: A Case-Cum-Research Study of India’s Under-Recovery Regime in FY2025–26 Abstract India’s public-sector Oil Marketing Companies (OMCs)— Indian Oil Corporation , Bharat Petroleum Corporation Limited , and Hindustan Petroleum Corporation Limited —entered FY2025–26 under severe financial stress due to rising crude oil and liquefied petroleum gas (LPG) prices, partial retail price controls, and delayed compensation mechanisms. LPG under-recoveries crossed approximately ₹41,000 crore during FY2024–25 and continued accumulating into FY2025–26. Simultaneously, petrol and diesel pricing constraints amplified pressure on OMC profitability, liquidity, and investment capacity. This case-cum-research paper examines the structural causes of under-recoveries, macroeconomic and geopolitical triggers, financial implications for OMCs, and fiscal consequences for the Government of India. The paper integrates policy analysis, financial ...