Government's Measures to Shield Citizens from Rising International Fuel Prices

The central government has implemented multiple measures to protect citizens from high international fuel prices, including reducing excise duties, instituting subsidies, and ensuring petrol and diesel availability. Other actions involve diversifying crude imports, levying windfall taxes, and increasing ethanol blending in petrol.

The central government has undertaken several initiatives to protect common citizens from surging international fuel prices, Minister of State in the Ministry of Petroleum and Natural Gas Suresh Gopi informed Parliament on Monday. Highlighting key interventions in a written reply in Rajya Sabha, he detailed various measures such as diversifying the crude import basket, imposing windfall taxes on petroleum product exports, invoking Universal Service Obligation provisions to ensure domestic availability of petrol and diesel, and boosting ethanol blending in petrol.

Gopi stated that the central government reduced central excise duty on petrol by Rs 13 per litre and on diesel by Rs 16 per litre in two phases in November 2021 and May 2022, with the benefits passed on fully to consumers. Several state governments also cut state VAT rates to offer additional relief. In March 2024, oil marketing companies further reduced retail petrol and diesel prices by Rs 2 per litre each. Currently, retail prices of petrol and diesel in Delhi stand at Rs 94.72 and Rs 87.62 per litre, respectively.

The minister highlighted that more than 60% of India's domestic LPG needs are imported, and LPG prices in the country are linked to international market rates. Despite a significant rise in the average international benchmark for LPG from USD 415 per tonne to USD 712 per tonne between 2020-2023, the government has not fully passed on the increase to consumers. Under the PAHAL Scheme, the applicable subsidy is directly transferred to consumers' bank accounts. Additionally, the oil marketing companies were compensated Rs 22,000 crore in 2022-2023 to cover under-recoveries. Since May 2022, the government has been providing targeted subsidies for Pradhan Mantri Ujjwala Yojana (PMUY) beneficiaries, recently increasing it to Rs 300 per cylinder.