India’s crude deal with Russia could cushion sharp rise in fuel prices

Sources have ruled out a cut on Central Excise for petrol and diesel. The government’s plan is to strike a crude deal with Russia at lesser-than-market rates. This could cushion the impact of a sharp rise in fuel prices once the freeze over daily revision is lifted. The freeze was implemented due to state assembly elections.

Top government sources have ruled out a cut in Central Excise duty on petrol and diesel even as the freeze in revision of prices during the election to state assemblies is hurting oil manufacturing companies.

Interestingly, sources said that the government has drawn up a plan to cushion the impact of a sharp rise in fuel prices due to high global crude trends once the freeze in daily revision is lifted. Sources confirm that a crude deal with Russia at softer than market rates is being stitched as a remedy.

A cut in the excise component in fuel costs could have allowed the public sector oil companies to raise prices of petrol, diesel and other products without hurting the consumer further. Fuel prices have stayed stable since the central government cut excise duty on petrol by Rs 5 and on diesel by Rs 10 to bring down retail rates from a record high in November last.

Currently, the Centre levies excise to the tune of 27.90 a litre on petrol and 21.80 a litre on diesel. Sources in the Finance Ministry told India Today TV that there is no excise duty revision proposal on the table at the moment.

This has meant high but stable prices for consumers despite a huge spike in crude prices following the Russian invasion of Ukraine, stable revenue for the central and state governments, but by not passing on the rise and fall in international prices to domestic consumers, oil companies have been experiencing unusual expansion and contraction in their margins.

Also Read: Russia-Ukraine war: How rising crude oil prices impact us in ways we don’t quite notice

The price of an Indian basket of crude had surged to $128.24 a barrel on March 9 from $117.39 on March 3. Crude is currently trading at $100 per barrel.