Cabinet greenlights ₹30,000 crore fuel payout, new I-T bill, infra projects

Mint

a day ago

The Union cabinet approved a massive ₹ 51,407 crore spending plan on Friday, addressing key areas from infrastructure and energy subsidies to a new version of its direct tax law. The new Income Tax Bill, 2025, which incorporates feedback from a parliamentary committee, will be introduced in the Lok Sabha on Monday.
The spending package includes a significant payout to state-owned fuel retailers for past losses and funds for a new highway, a regional development plan for the Northeast, and a technical education scheme.
A substantial portion of the budget— ₹ 30,000 crore—has been earmarked to compensate the country's three public sector oil marketing companies: Indian Oil Corp., Bharat Petroleum Corp., and Hindustan Petroleum Corp. These firms have absorbed losses from selling cooking gas (LPG) at government-regulated prices while global prices remained high. The payment will be made in 12 installments, ensuring the companies can continue to procure LPG and maintain their capital expenditure, according to a government statement.
The Cabinet has also sanctioned a targeted subsidy of ₹ 12,000 crore for free cooking gas connections under the Ujjwala scheme, for FY26. This programme provides a subsidy of ₹ 300 for each 14.2 kg LPG cylinder, for up to nine refills per year.
Under the Ujjwala 2.0 initiative, all beneficiaries receive a deposit-free LPG connection, which includes the cylinder, pressure regulator, Suraksha hose, domestic gas consumer card, and installation charges. The first refill and stove are also provided free of charge, with all costs borne by the government or the fuel retailers.
India imports approximately 60% of its LPG requirements. To shield PMUY beneficiaries from the impact of sharp fluctuations in international prices and to encourage sustained usage of LPG, the government first introduced a targeted subsidy of ₹ 200 per 14.2 kg cylinder in May 2022. This subsidy was subsequently increased to ₹ 300 in October 2023. The strategic intervention has been successful, with the average per capita consumption of PMUY consumers improving from around 3 refills in 2019-20 to 4.47 during FY24-25, demonstrating the scheme's positive impact on a national level.
The cabinet also approved the revised Income Tax Bill, 2025, which seeks to simplify India's six-decade-old direct tax law, said two persons familiar with the development.
The revised bill will be tabled in the Lok Sabha on Monday, the people said. It incorporates most of the recommendations of a select committee of Parliament, chaired by Bharatiya Janata Party MP Baijayant Panda, that reviewed the draft of the proposed law, they said, speaking on the condition of anonymity.
Once passed, it will replace the Income-Tax Act, 1961.
The previous version of the Bill introduced in the Lok Sabha in the Budget session of Parliament on 13 February has been formally withdrawn, the government said in a statement. Almost all suggestions of the select committee have been accepted, it said. 'Suggestions have also been received from other sources, which are required to convey the legislative meaning.'
A fresh bill will be introduced in the Lok Sabha in due course, the statement said.
One of the persons quoted earlier said, 'To avoid confusion by multiple versions of the Bill and to provide a clear and updated version with all changes incorporated, the new version of the Income Tax Bill will be introduced for the consideration of the House on Monday.'
Mint had reported on Thursday that the cabinet was set to consider the revised bill on Friday.
Queries emailed to the finance ministry and to the cabinet secretariat on Friday remained unanswered at the time of publishing.
The Cabinet has approved a new Special Development Package (SDP) with a total outlay of ₹ 7,250 crore for the states of Assam and Tripura. The primary goal is to promote peace, foster inclusive development, and rehabilitate affected communities.
The funds will be utilized for a range of projects, including infrastructure improvement, job creation, and providing better health services, education, and skill development.
Of the total amount, the central government will contribute ₹ 4,250 crore, while the Assam government will provide the balance ₹ 3,000 crore. This initiative is expected to bring stability, integrate affected communities into the national mainstream, and give a major push to tourism in the region, positioning it as a long-term investment in social harmony and economic progress.
The Cabinet also greenlit a major infrastructure project with a capital cost of ₹ 2,157 crore for the construction of a new 4-lane highway section from Marakkanam to Puducherry on National Highway-332A. This project addresses the significant congestion on the existing two-lane highway and associated state highways, which are critical for connectivity between Chennai, Puducherry, Viluppuram, and Nagapattinam.
The project will upgrade approximately 46 km of NH-332A to a modern 4-lane configuration. This upgrade will not only decongest the existing corridor and improve safety but also cater to the mobility needs of the rapidly growing towns in the region.
The new alignment will seamlessly integrate with other major national and state highways, as well as key multimodal transport hubs, including two railway stations, two airports, and a minor port. This will facilitate the faster movement of goods and passengers, boosting regional economic growth and tourism. The project is expected to generate significant employment, with approximately 8 lakh person-days of direct and 10 lakh person-days of indirect employment, opening new avenues for growth and prosperity in the surrounding areas.
The government also cleared a new scheme called 'MERITE' (Modernizing Education and Research in Technical Institutions) with a budget of ₹ 4,200 crore.
The five-year programme, partly funded by the World Bank, aims to improve the quality of technical education in 275 engineering and polytechnic institutions across India.
The initiative will focus on modernizing courses, encouraging research, and increasing student employability through internships and skill development. By aligning with the National Education Policy-2020, MERITE is designed to benefit over 7.5 lakh students and is expected to significantly boost placement rates and reduce unemployment among engineering graduates.