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Informist, Friday, May 8, 2026

 

NEW DELHI – The government is bearing around INR 140 billion per month from the cut in excise duty on petrol and diesel announced in April to shield oil marketing companies and consumers from the surge in crude oil prices, Sujata Sharma, joint secretary in the Ministry of Petroleum and Natural Gas, said Friday. Her comments come against the backdrop of experts advocating the pass-through of international fuel prices to retail prices to relieve some of the fiscal burden and pressure on oil companies.

 

The total underrecovery by public-sector oil companies across all products – petrol, diesel, and liquefied petroleum gas – is around INR 300 billion per month, Sharma said. The government's excise duty cut was announced to give them support, she said. 

 

India is facing one of the worst energy crises in decades due to the war in West Asia. It has been exposed to energy supply and price shocks, given its dependence on countries in the Persian Gulf region for crude oil, liquefied petroleum gas, and liquefied natural gas supplies. 

 

Crude oil prices have soared by around 60% following the closure of the Strait of Hormuz since early March. Nearly half of India's crude and natural gas imports pass through this crucial waterway. The supply shock has led to a surge in fuel prices in several developing and advanced economies, but retail prices in India have remained unchanged.

 

The government has taken a slew of measures to mitigate the impact of the war, including cutting excise duty on petrol to INR 3 per litre from INR 13 per litre and that on diesel to zero from INR 10 per litre to help oil marketing companies absorb the rise in crude oil prices.

 

Earlier this month, a senior finance ministry official said that if the excise duty cut remains in place for a year, it will cost the exchequer around INR 1.70 trillion. While petrol and diesel prices have not yet been hiked, the official said the possibility cannot be ruled out, given how prolonged the conflict has become.   End

 

US$1 = INR 94.48

 

Reported by Priyasmita Dutta and Shweta

Edited by Saji George Titus

 

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