Union Petroleum Minister Hardeep Singh Puri has categorically ruled out reducing petrol and diesel prices, claiming oil PSUs absorbed ₹74,781 crore in below-cost fuel sales. Yet IOC, BPCL, HPCL, and ONGC have reported record or near-record profits for FY26 — raising the question of whose losses, exactly, the consumer is being asked to subsidise.

Here is a number the government would prefer you absorb without a calculator: ₹74,781 crore. That, according to Union Petroleum Minister Hardeep Singh Puri, is what India's oil public-sector undertakings collectively lost by selling petrol and diesel below cost. It is a staggering figure — the kind designed to make a citizen feel guilty for even asking why the pump price has not budged in over two years. The only trouble is, the companies supposedly bleeding from this sacrifice have just filed their most profitable year on record.

Something in this arithmetic does not add up. And the Indian consumer, paying north of ₹100 per litre for petrol in most major cities, deserves to know which column is lying.

The Minister's Case: Below-Cost Sales and Patriotic PSUs

Puri's argument, reiterated across press conferences and Parliament, rests on a straightforward claim: Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL) sold petrol and diesel at prices below their landed cost — the sum of crude purchase, refining, freight, and dealer margins. According to government statements reported by PTI and ANI, the cumulative under-recovery over recent fiscal periods touched ₹74,781 crore. The minister has framed this as a form of subsidy the PSUs absorbed to shield consumers from global crude volatility, particularly during the Russia-Ukraine crisis when Brent crude spiked above $120 a barrel.

On its face, it is a compelling narrative: selfless state-run companies eating losses so your commute stays affordable. Puri has gone further, pointing out that LPG — cooking gas — continues to be sold below cost even after partial price increases, adding another ₹20,000–25,000 crore in annual under-recovery according to ministry estimates. The message is clear: be grateful, do not ask for more.

But gratitude requires trust in the ledger. And the ledger, as filed with the Bombay Stock Exchange, tells a rather different story.

The Profit Story the 'Loss' Narrative Obscures

Indian Oil Corporation, the country's largest refiner, reported a standalone net profit of over ₹28,000 crore for FY26, according to its quarterly filings — among its best years ever. BPCL posted net profit north of ₹14,000 crore. Even HPCL, historically the most financially squeezed of the three downstream majors, swung to a robust profit. Upstream giant ONGC — the entity that actually pumps crude — reported record net profits exceeding ₹40,000 crore on the back of strong realisation prices and dividend income from subsidiaries.

Add these up: the very companies Puri says lost ₹74,781 crore in below-cost fuel sales collectively banked profits in the range of ₹90,000–₹100,000 crore in the same period. The 'loss' and the profit coexist in the same annual report. That is not a contradiction only an auditor notices — it is the central question of India's fuel pricing policy, and the minister would rather you did not ask it.

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The Accounting Sleight: 'Below Cost' Is Not the Same as 'Loss'

Here is what the ₹74,781 crore figure actually measures, and what it carefully does not. The 'below-cost' calculation compares India's retail pump price against a theoretical trade-parity price — what the fuel would cost if sold at the international benchmark plus taxes and margins. When global crude is high and the government holds domestic prices flat, the gap between this benchmark and the pump price is labelled an under-recovery.

But under-recovery is not an actual cash loss on the books. It is a notional figure — the revenue the PSU would have earned if it had priced at trade parity. The company's actual financial health depends on its total revenue from all segments — refining margins (which were historically fat in FY24–FY26 as global refining capacity stayed tight), petrochemical profits, pipeline income, marketing margins, and treasury gains. A refiner can 'lose' on one product line and still post record consolidated profit because its other business lines are booming.

Put it this way: if a shopkeeper sells rice below the market rate but makes a killing on lentils, spices, and cooking oil, and posts his best profit ever, would you accept his argument that he cannot reduce the price of rice because he is 'losing money'? That is the Puri argument, translated into a language the ₹100-a-litre consumer can parse.

Political Pulse

Inside South Block and the corridors of Shastri Bhawan, the calculus is less about accounting than about fiscal management and electoral timing. The talk in policy circles, according to persons familiar with government thinking, is that the Centre views PSU fuel pricing as a fiscal shock absorber — a tool to manage the excise revenue line without appearing to raise taxes. During the 2022 crude spike, the government cut excise duty on fuel twice but never fully passed through the benefit; as crude eased, pump prices stayed frozen, allowing PSU margins to fatten and dividends to flow back into the exchequer.

This is the quiet machinery behind the minister's public sympathy for oil companies: PSU dividends and buybacks are a significant revenue source for a government running a fiscal deficit target. According to budget documents and reporting by The Hindu and Indian Express, the Centre collected over ₹35,000 crore in dividends from oil PSUs in FY25 alone. Cutting fuel prices would crimp PSU profits, which would crimp dividends, which would blow a hole in a fiscal arithmetic already under strain from revenue forgone on LPG and fertiliser subsidies.

The real reason for no fuel price cut is not that PSUs are losing money — it is that the government needs them to keep making it. Puri's ₹74,781 crore figure is a rhetorical shield for a fiscal decision. The consumer is not being protected from global prices; the consumer is being used to protect the fisc from the consequences of its own spending commitments. That, in India Herald's assessment, is the between-the-lines story the press conference will never deliver.

The LPG Wrinkle — Where the Real Subsidy Burden Lives

In fairness, the ministry's case is not entirely hollow on one front: LPG. Cooking gas genuinely is sold below cost, with the government providing a direct-benefit transfer subsidy to Ujjwala beneficiaries and absorbing the rest through PSU balance sheets. According to ministry data cited by NDTV and PTI, the per-cylinder under-recovery on LPG was in the range of ₹150–200 through much of FY26. Multiply by the roughly 30 crore active LPG connections, and the aggregate burden is real.

But this LPG cost is precisely why the petrol and diesel profit matters. The super-normal refining margins on auto fuels cross-subsidise the genuine loss on cooking gas. The consumer paying ₹100-plus for petrol is, in effect, subsidising the LPG cylinder — a transfer the government does not publicly acknowledge. If the minister wanted to be transparent, he would say: 'We are not cutting petrol prices because we are using your petrol margin to pay for someone else's cooking gas.' That would be an honest, defensible policy argument. The ₹74,781 crore in notional losses is the dishonest version of the same argument.

Global Crude Is Down — Where Did the Benefit Go?

The timing of Puri's declaration makes the contradiction sharper. Brent crude has traded in the $70–80 per barrel range for much of FY26, according to market data reported by Reuters — well below the $100-plus spikes of 2022. India's crude import basket price, tracked by the Petroleum Planning and Analysis Cell (PPAC), has been among the lowest in three years.

In a genuinely deregulated market, this should have meant lower pump prices. India officially deregulated petrol pricing in 2010 and diesel in 2014. But the reality, as every Indian motorist knows, is that prices are raised swiftly when crude rises and held frozen when crude falls. The asymmetry is not an accident; it is a feature of a system where PSU pricing decisions require an unstated political nod, and the nod only comes when it suits the exchequer.

According to calculations by energy analysts cited in Indian Express, if the full benefit of the crude decline since mid-2022 had been passed through, petrol could be ₹8–12 per litre cheaper in most states. That gap — between what you pay and what you should pay — is not an under-recovery. It is an over-recovery the government does not name.

Who Benefits, Who Pays

Trace the money. The consumer pays ₹100-plus. Of that, roughly ₹32–35 is central excise duty, according to PPAC data. Another ₹15–22 is state VAT, varying by state. The PSU's marketing and refining margin is built into the remainder. When crude is cheap and the pump price stays frozen, the PSU margin swells. When the PSU margin swells, profits rise. When profits rise, dividends to the Centre rise. When dividends rise, the fisc breathes easier.

The consumer is, in effect, a fiscal instrument — an involuntary lender to a government that has decided, without saying so, that ₹100-a-litre petrol is a tax it can impose without calling it one. Puri's refusal to cut prices is not a commercial decision by independent companies. It is a political decision by a government that has found a way to raise revenue without tabling a finance bill.

What to Watch Next

The forward signal is clear. With state elections in several major states approaching and the next Union Budget cycle beginning, India Herald's read is that the government will calibrate any price action to political timing, not crude cost. A token ₹2–3 cut before a key election is the playbook — enough for a headline, not enough to dent PSU margins or exchequer dividends. A structural, transparent pricing reform that links pump prices to actual crude costs in real time — the promise of deregulation — remains politically unthinkable.

What the reader should watch for: any movement in excise duty, not in base fuel price. A duty cut lets the government claim credit for 'reducing prices' without touching PSU margins. It is the path of least resistance and maximum political optics. If Puri's position shifts, it will shift through the excise lever, not through genuine deregulation.

Until then, the next time you fill your tank and see the total cross four figures, remember: somewhere in a PSU boardroom, someone is recording that transaction as a loss. And somewhere in North Block, someone is recording the dividend it generates as a gain. The only person for whom it is unambiguously an expense is you.

Allegations reported here are attributed to named sources and remain unproven unless a court has ruled; matters sub judice are reported without prejudgment.

Reported and written with AI assistance under India Herald's editorial standards; a human editor governs publication.

Key Takeaways

• Hardeep Singh Puri's ₹74,781 crore 'below-cost' figure is a notional under-recovery, not an actual cash loss — IOC, BPCL, HPCL, and ONGC collectively posted ₹90,000–₹100,000 crore in profits in the same period.
• PSU dividends and buybacks are a major revenue source for the Centre — cutting fuel prices would crimp profits that fund the fiscal deficit target, which is the real reason prices stay frozen.
• If the full benefit of crude's decline from $100+ to $70–80 per barrel had been passed through, petrol could be ₹8–12 per litre cheaper, according to energy analyst calculations cited in Indian Express.
• The consumer paying ₹100+ for petrol is effectively cross-subsidising LPG cooking gas — a transfer the government does not publicly acknowledge.
• Any pre-election fuel price relief is more likely to come through an excise duty cut (political optics) than through genuine deregulated pricing reform.

Frequently Asked Questions

Why is Hardeep Puri refusing to cut petrol and diesel prices in 2026?

Puri claims oil PSUs absorbed ₹74,781 crore in below-cost fuel sales and cannot afford further cuts. However, the same PSUs posted record or near-record profits in FY26, suggesting the real reason is fiscal — the government needs PSU profits and dividends to manage its deficit target.

What does 'below-cost sales' or 'under-recovery' actually mean for oil PSUs?

Under-recovery is a notional figure — the difference between what the PSU charged at the pump and what it would have earned at trade-parity (international) prices. It is not an actual cash loss on the company's books; the PSU's total profitability depends on all business segments including refining margins, petrochemicals, and pipeline income.

How much profit did Indian oil PSUs make in FY26?

IOC reported standalone net profit of over ₹28,000 crore, BPCL over ₹14,000 crore, HPCL posted a robust profit, and ONGC exceeded ₹40,000 crore in net profit — a combined figure in the range of ₹90,000–₹100,000 crore, per company filings.

Could petrol be cheaper if crude price drops were passed through?

Yes. Energy analysts cited by Indian Express estimate petrol could be ₹8–12 per litre cheaper if the full benefit of crude's decline from $100+ to $70–80 per barrel had been passed on to consumers.

How does the government benefit from keeping fuel prices high?

High PSU fuel margins generate large profits, which translate into dividends and buybacks flowing back to the Centre — over ₹35,000 crore from oil PSUs in FY25 alone, per budget documents. Additionally, central excise duty of ₹32–35 per litre on petrol is a major revenue source.