The Indian government is contemplating a substantial increase in retail fuel prices, with petrol and diesel potentially rising by ₹4–5 per litre. Domestic LPG cylinders could also see a hike of ₹40–50. This move, if approved, would mark the first adjustment in petrol and diesel prices in India in nearly four years, as rates have remained largely frozen since 2022 despite volatile global crude oil markets.
Official sources indicate that oil marketing companies (OMCs) are under considerable financial pressure due to surging crude prices. These companies have been absorbing higher input costs without fully passing them on to consumers, leading to mounting under-recoveries.
Reasons Behind the Proposed Hike
- Rising Crude Prices: Global crude oil prices have seen a sharp increase, partly triggered by evolving geopolitical tensions in West Asia.
- Financial Strain on OMCs: The continued absorption of high input costs has significantly strained the finances of public sector oil marketing companies.
- Fiscal Burden: Elevated crude prices also exert pressure on government finances through increased subsidy outgo and potential revenue trade-offs.
Internal deliberations are currently underway within the government, exploring various options to balance fiscal stability with consumer protection. A person aware of the discussions noted, “The government is making all efforts to ensure that any impact on inflation is minimised.”
Decision Expected Soon
A final decision on the proposed hike is yet to be made, but sources suggest that an announcement could come within the next 5–7 days. Any calibrated increase is expected to be structured to avoid a sharp spike in retail inflation, particularly given the current sensitivity of food prices and persistent global uncertainties. The ultimate decision will likely depend on the trajectory of global crude prices and geopolitical developments in key oil-producing regions in the coming days.