Oil PSUs to absorb excise duty hike on petrol, diesel, no impact on consumers: Hardeep Puri

IANS April 7, 2025 264 views

The Indian government has implemented a strategic approach to manage fuel taxation without burdening consumers. Union Minister Hardeep Puri revealed that oil public sector undertakings will absorb the Rs 2 per litre excise duty hike without passing costs to consumers. This decision comes amid favorable global crude oil prices, which have fallen to around $60 per barrel. The move demonstrates the government's commitment to balancing fiscal requirements with consumer welfare.

"Oil marketing companies are managing inventories based on lower crude prices" - Hardeep Singh Puri
Oil PSUs to absorb excise duty hike on petrol, diesel, no impact on consumers: Hardeep Puri
New Delhi, April 7: The government-owned oil marketing companies will absorb the increase in excise duty on petrol and diesel, announced by the Finance Ministry, as their input costs have come down due to the decline in crude oil prices in the global market, Union Minister for Petroleum and Natural Gas Hardeep Singh Puri said on Monday.

Key Points

1

Oil PSUs will absorb Rs 2/litre excise duty without raising consumer prices

2

Crude prices hovering around $60 per barrel enable cost absorption

3

Finance Ministry aims to boost revenue through strategic taxation

The Minister said that the Rs 2 per litre hike on petrol and diesel would not be passed on to consumers as the oil marketing companies, Indian Oil, Bharat Petroleum, and Hindustan Petroleum, are currently managing inventories based on crude oil purchased at lower prices earlier. This allows them to absorb the additional tax burden without raising retail fuel prices as the government has to keep consumer interests in mind, he added.

Puri emphasised that the government is mindful of market volatility and the need to balance the financial health of the oil marketing companies with consumer interests. He noted that with crude oil prices hovering around $60 per barrel, there could even be potential for future price cuts of fuels if global trends remain favourable.

The Finance Ministry has hiked the excise duty on petrol and diesel to mop more funds for social welfare schemes and investment in infrastructure projects to spur growth while keeping the fiscal deficit in check.

The decision to keep retail prices steady while raising more resources for the national exchequer to ensure stable growth is viewed by economists as a pragmatic approach.

Economists see the government’s strategy that is sensitive to consumer needs while navigating fiscal priorities set by the Finance Ministry.

Crude oil prices have fallen to a four-year low in the global market with the benchmark Brent crude falling to $63 a barrel on Monday, the lowest since April 2021 and the US West Texas Intermediate crude declining to $59.57. India, the world’s 3rd largest importer of crude, stands to gain as oil prices have fallen.

The decline in oil prices augurs well for the Indian economy as the country imports around 85 per cent of its crude requirement, and any decline in oil prices leads to a reduction in the country’s import bill. This, in turn, leads to a lowering of the current account deficit (CAD) and strengthening of the rupee.

Apart from strengthening the external balance, a decline in oil prices also leads to lower prices of petrol, diesel, and jet fuel in the domestic market, which eases inflation in the country.

Reader Comments

R
Rahul K.
Finally some good news for consumers! With inflation hitting us hard, not having to pay more for fuel is a relief. Hope the govt maintains this balance between revenue needs and public interest.
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Priya M.
While I appreciate that prices aren't going up, I wonder how long OMCs can keep absorbing these costs. What happens when crude prices rise again? 🤔
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Sanjay T.
Smart move by the government! Using lower crude prices to fund welfare schemes without burdening citizens. More infrastructure development is always welcome 👍
A
Anjali P.
I'm cautiously optimistic. The economic benefits mentioned sound great, but I hope this doesn't mean we'll see sudden price hikes later when inventories run low. Transparency would be appreciated.
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Vikram S.
This is a temporary solution at best. The govt should focus on reducing our dependence on oil imports through renewable energy investments. The future is green! 🌱
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Neha R.
As a small business owner, stable fuel prices make budgeting so much easier. Hope the global crude situation remains favorable for us 🙏

We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.

Tags:
Fuel Prices Hardeep Puri Oil Marketing Companies Excise Duty Crude Oil Indian Economy
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