New Delhi, May 15: The Centre’s decision to raise petrol and diesel prices by just ₹3 per litre reflects a calibrated strategy to shield consumers from the sharp surge in global crude oil prices, even as public sector oil marketing companies (OMCs) continue to absorb substantial losses, officials said on Friday.
According to government sources, the increase remains significantly below the actual under-recoveries faced by state-run fuel retailers. Current under-recoveries are estimated at nearly ₹26 per litre for petrol and as high as ₹82 per litre for diesel, indicating that the bulk of the financial burden is still being absorbed by companies such as Indian Oil Corporation, Bharat Petroleum Corporation Limited, and Hindustan Petroleum Corporation Limited.
Officials indicated that the government and OMCs are currently absorbing losses of around ₹1,000 crore per day to prevent a steep pass-through of elevated crude oil prices to retail consumers.
Global crude prices have crossed the $100-per-barrel mark amid escalating geopolitical tensions in West Asia, particularly the intensifying US-Iran conflict and disruptions surrounding the Strait of Hormuz, through which nearly one-fifth of global energy supplies typically transit.
Officials stressed that the government is consciously attempting to avoid transferring the entire external price shock to households and businesses, citing the inflationary impact that a sharp fuel price increase could trigger across transport, food, and essential goods.
The Centre is also continuing to cushion the agriculture sector through fertiliser subsidies estimated at nearly ₹2.25 lakh crore, aimed at protecting farmers from rising global input costs.
Sources said the broader policy approach currently prioritises gradual energy efficiency improvements and reduced fuel dependence rather than abrupt retail price hikes. The government has also been pushing for lower import dependence and sustainable fuel consumption patterns as part of India’s long-term energy strategy.
India’s rising crude import bill remains a major macroeconomic concern. Officials described the combined pressure from elevated oil and gold imports as a “massive twin drain” on the economy. The country’s annual crude oil import bill is estimated at ₹12–15 lakh crore, with every $10 increase in crude prices adding approximately $13–14 billion to import costs.
Despite global volatility, officials maintained that India’s macroeconomic position remains significantly stronger than during the 2012–13 period, noting that the current account deficit remains below 1.5% of GDP compared with nearly 5% during the earlier crisis.
Meanwhile, Indian Oil Corporation officials said refinery operations are running at maximum capacity to ensure uninterrupted fuel supplies. Authorities added that India currently holds around 60 days of crude oil reserves, indicating no immediate concerns regarding fuel availability or refining operations.
