Why Govt's Move to Cut Petrol, Diesel Excise Duty Isn't Really a Relief for the Common People
New Delhi: The Union government on Friday (March 27) reduced excise duty on petrol to Rs 3 per litre and brought it down to zero for diesel, as per a gazette notification. Moreover, a windfall tax of Rs 21.5 per litre has been imposed on diesel exports. This move will unlikely reduce the purchasing prices of these fuels for consumers.
Now, international crude prices have increases from 70 dollars/barrel to around 122 dollars/barrel, approximately amid the war on Iran by US-Israeli forces. Since prices in India remained unchanged for consumers, the Oil Marketing Companies (OMCs) were bearing the additional price and not passing it on to the dealers. By reducing the excise duty, the government will ease the burden on OMCs.
Notably, the government didn't reduce the prices for consumers earlier when crude oil prices went down globally which meant OMCs in India made huge profit while the consumers couldn't benefit as diesel and petrol prices crashed in the international market.
The Govt wants praise for not raising fuel prices at this time. That might have been warranted if they’d cut them when oil prices crashed. But they kept them high instead.
If OMCs were allowed to make huge profits when oil prices were low, it's only fair they absorb losses now. pic.twitter.com/L18taNmCZ3
— TCA Sharad Raghavan (@SharadRaghavan) March 27, 2026
"When global crude oil prices fell as they did on seven different occasions in the past 12 years consumer prices in India were not reduced. Today’s announcement was because of assembly elections. Wait till April 30th," Congress general secretary Jairam Ramesh wrote on X.
When global crude oil prices fell as they did on seven different occasions in the past 12 years consumer prices in India were not reduced.
Today’s announcement was because of assembly elections. Wait till April 30th. https://t.co/YwkyzaMHUl
— Jairam Ramesh (@Jairam_Ramesh) March 27, 2026
Explaining how the Modi government has not provided any relief to consumers in the country when global prices of crude oil fell down, Congress leader Pawan Khera wrote on X: "Modi’s Masterstroke: Cheaper crude. Costlier fuel. In May 2014, crude oil was at $106.94 per barrel. Petrol cost ₹71.71 per litre, and diesel ₹56.71. Fast forward to just before the West Asia conflict – crude oil had fallen to around $70 per barrel. But petrol was selling at ₹94.72 per litre, and diesel at ₹87.62 in Delhi. India also bought crude oil from Russia at a discounted rate. But the benefit did not translate into relief for consumers. It only made the Ambanis richer." Reliance Industries Limited (RIL) operates the world’s largest single-site refinery in Gujarat’s Jamnagar.
"So while global prices fell, the burden on Indian consumers rose. How does that add up? Because between 2014 and 2026, the government revised the excise duty a total of 21 times, increasing it 12 times. So much for Achche Din!" he added.
Modi’s Masterstroke: Cheaper crude. Costlier fuel.
In May 2014, crude oil was at $106.94 per barrel. Petrol cost ₹71.71 per litre, and diesel ₹56.71.
Fast forward to just before the West Asia conflict – crude oil had fallen to around $70 per barrel. But petrol was selling at…
— Pawan Khera 🇮🇳 (@Pawankhera) March 27, 2026
In another post, the Congress leader elaborated that what has actually been reduced is the ‘special additional excise duty’ – a levy paid by OMCs to the Union government.
"The words ‘special’ and ‘additional’ reveal how unnecessary this tax is. The Oil Marketing Companies have been absorbing losses since the outbreak of the conflict in West Asia. The government has now merely agreed to share a small part of that burden but reducing the 'special additional' levy - that too almost a month later. Relief exists but only in the narrative - not in reality. Instead of manufacturing headlines and fooling people, the government should focus on delivering actual relief to consumers," Khera wrote.
If you saw the headlines about petrol and diesel prices ‘coming down’ and thought the government had offered relief to your pocket – you’d be mistaken.
As of now, prices remain the same for dealers and for consumers.
What has actually been reduced is the ‘special additional… https://t.co/iZ95MEjOC5
— Pawan Khera 🇮🇳 (@Pawankhera) March 27, 2026
Earlier in the day, Union petroleum minister Hardeep Singh Puri wrote a post on X praising Prime Minister Narendra Modi for taking a "huge hit" on taxation revenues to ensure "very high losses of oil companies (approximately 24 Rs/litre for petrol and 30 Rs/litre for diesel) at this time of sky high international prices are reduced".
"The Modi Government had two choices- either increase prices drastically for citizens of Bharat as all other nations have done or bear the brunt on its finances so that Indian citizen is insulated from international volatility. Hon’ble Prime Minister Narendra Modi Ji, in keeping with his government’s commitment of last 4 years since the conflict in Russia-Ukraine started, decided to take a hit on its own finances again to safeguard the Indian citizen," Puri wrote.
He added: "Government has taken a huge hit on it taxation revenues to ensure very high losses of oil companies (approximately 24 Rs/litre for petrol and 30 Rs/litre for diesel) at this time of sky high international prices are reduced. At the same time, export tax has been levied as international prices of petrol and diesel have skyrocketed and any refinery exporting to foreign nations will have to pay export tax. My gratitude to Hon’ble PM Narendra Modi Ji and Hon’ble FM Nirmala Sitharamji for this very timely, bold and visionary decision!"
Social media is now flooded with clips of BJP leaders, including ministers and MPs thanking the prime minister for "taking the hit". What is not being discussed is why the government didn't ease the burden of the public when crude oil prices were at 70 dollars/barrel just a month ago, before the war was started by US and Israel by striking Iran and killing its Supreme Leader Ayatollah Ali Khamenei. Despite buying oil at discounted rates from Russia, the benefits seemingly went to OMCs, leaving common people unaffected. The big question still remains: why did the government not provide relief to the common people then?
This article went live on March twenty-seventh, two thousand twenty six, at twenty-seven minutes past four in the afternoon.The Wire is now on WhatsApp. Follow our channel for sharp analysis and opinions on the latest developments.
