The Narendra Modi government has given up nearly Rs 14,000 crore in tax revenue after slashing excise duty on petrol and diesel earlier this year to cushion consumers from rising global fuel prices triggered by the escalating West Asia crisis.
News agency ANI reported that the disclosure was made on Monday (May 25) by Sujata Sharma, Joint Secretary in the Petroleum Ministry, who said the government had taken the financial hit to ensure fuel prices remained under control despite growing pressure on imports and supply chains.
Why the government cut fuel taxes
On March 27, the Centre reduced excise duty by Rs 10 per litre on both petrol and diesel after crude oil prices surged amid tensions in West Asia. India remains heavily dependent on the region for its energy needs.
According to Sharma, around 40% of India’s crude oil imports come from West Asia and nearly 90% of LPG imports depend on the region. Sharma also said that about 65% of natural gas imports are linked to the area.
“West Asia crisis, our imports are affected… but all efforts have been made to ensure the smooth supplies of petroleum products within the country,” Sharma said.
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Oil companies still bleeding despite fuel price hikes
Even after recent fuel price increases, oil marketing companies (OMCs) continue to suffer major losses, the ministry said.
According to Sharma, OMCs are currently losing nearly Rs 600 crore every day due to the gap between global fuel costs and domestic pricing pressures.
The statement highlights the difficult balancing act facing the government, protecting consumers from runaway fuel inflation while also trying to contain mounting fiscal and energy-sector stress.
Panic buying fears in some states
The ministry also acknowledged reports of panic buying of fuel and LPG cylinders in parts of Gujarat, Maharashtra and Uttar Pradesh. However, officials said the situation was being monitored closely and attributed much of the increased demand to agricultural activity and bulk purchases rather than supply shortages.
“Supply situation is being monitored closely, so that if intermittent dryouts happen somewhere, they can be addressed,” Sharma said.
To avoid disruptions, petrol and diesel stocks at retail outlets across the country have already been replenished.
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LPG and gas supply under focus
The government said it is also ramping up domestic LPG production and strengthening gas infrastructure to ensure uninterrupted supply.
India’s domestic LPG production has now reached nearly 50,000 tonnes per day, Sharma said.
On piped natural gas (PNG) expansion, she added that 7.99 lakh PNG connections have already been activated
Infrastructure for another 2.87 lakh connections is ready. Interestingly, LPG deliveries over the past four days have reportedly exceeded the number of fresh bookings, indicating active supply management amid rising demand concerns.
With crude prices remaining volatile and shipping routes facing uncertainty, the government is increasingly walking a tightrope between protecting consumers, managing inflation and preventing supply disruptions.
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