Oil companies distribute profits as dividends to finance roads and highways: SourcesOil companies pay around half of their annual profits to the center as dividends, plus corporation tax. According to sources who cited enquiries about the earnings of oil marketing corporations, or OMCs, it finances roads, highways, railroads, metro systems, and the larger public investment program.
According to sources, the portion kept by the OMCs is used for capital expenditures, such as expanding refining capacity, diversifying renewable energy sources, building infrastructure for pipelines and storage, building contingency reserves, and the long-term build-up necessary for energy security, affordability, and self-sufficiency.

The cost of a single refinery expansion program might range from Rs 50,000 crore to Rs 60,000 crore. According to reports, the corporations require an annual profit of almost Rs 1,00,000 crore to maintain this capital pipeline.
As an illustration, sources stated that in 2024–2025, the OMCs absorbed Rs 40,434 crore in LPG under-recoveries to maintain the affordability of customer cylinders. This absorption was financed by the same profit pool that the Opposition wishes to view as exorbitant.
According to sources, the OMCs' combined profit of Rs 77,821 crore for 2025–2026 is a 3–4% net margin on their combined sales of about Rs 20 lakh crore, which is the working margin that any successful commodity refiner of this size generates.

Sources said that this increase has a "artificially depressed base," while some detractors referring to the combined profit as a "windfall during a crisis" and labelling it a 130% increase over 2024–2025.
The OMC profit for 2024–2025 was Rs 33,602 crore, a decrease of Rs 47,384 crore from 2023–2024. The oil firms absorbed the Rs 40,434 crore in under-recoveries for residential LPG that year, which is what caused the decline. Since then, that sum has been paid.
The Opposition has harshly criticised the latest increases in oil prices, which amount to about Rs 8 per litre. They have questioned the timing of the increases and accused the oil companies of profiteering.

Sources cited the global price increase that followed the US war on Iran in response to opposition questioning about why retail prices of petrol and diesel had increased in 2026. According to sources, there are additional expenses, such as higher loading premiums, increased freight, and insurance surcharges, in addition to the supply chain disruption driving up prices.
Nevertheless, retail costs in India continue to be far lower than those in nearby nations. Diesel costs Rs 141.50 per litre and petrol costs Rs 136.47 per litre in Kathmandu, Nepal. According to sources, as of May 23, fuel costs Rs 139.17 per litre and diesel costs Rs 138.82 per litre in Pakistan.According to insiders, the main reason India's macro inflation has remained stable is the country's retail price discipline.

According to sources, the government reduced the excise tax on fuel and diesel by Rs 10 per litre on 27 March. This was an early action made within four weeks of the strikes on Iran, protecting customers from this price increase.
It coincides with previous significant excise reductions by the NDA administration, which were Rs 5 per litre for petrol and Rs 10 per litre for diesel in November 2021 and Rs 8 per litre for petrol and Rs 6 per litre for diesel in May 2022.
These reductions total Rs 23 per litre for petrol and Rs 26 per litre for diesel.Additionally, the government has extended the home LPG cylinder cap of Rs 550 till 2024–2025. The OMCs covered the shortfall of Rs 40,434 crore and have since received compensation. In order to safeguard domestic aviation, ATF prices have also been controlled within a band.