Fuel Prices Drop Amid Government Initiatives
In a significant development for consumers, petrol and diesel prices in India have seen a decline, with current rates at Rs. 94.77 and Rs. 87.67 per litre in Delhi. This reduction is attributed to various government measures, including cuts in central excise duties and state VAT rates. Additionally, Public Sector Oil Marketing Companies (OMCs) have recently lowered retail prices by Rs. 2 per litre, marking a continued effort to ease the financial burden on citizens.
Government Actions Driving Price Reductions
The Indian government has implemented several strategies to bring down fuel prices for consumers. In November 2021 and May 2022, the central government reduced the excise duty on petrol and diesel by Rs. 13 and Rs. 16 per litre, respectively. These reductions were fully passed on to consumers, contributing to the current lower prices. Furthermore, some state governments have also taken steps to decrease state VAT rates, enhancing the overall relief for citizens.
In March 2024, OMCs announced an additional reduction of Rs. 2 per litre for both petrol and diesel. This move is part of a broader trend in India, which has been unique among major economies, as it has managed to lower fuel prices while many other countries have experienced increases. The government’s proactive approach in monitoring global energy markets and adjusting domestic policies has played a crucial role in this achievement.
Impact on LPG Prices and Subsidies
In addition to fuel prices, the cost of domestic liquefied petroleum gas (LPG) has also been a focal point for the government. India imports around 60% of its LPG, and the pricing is closely linked to international market rates. Despite a significant rise in the average Saudi CP for LPG—up 63% from July 2023 to February 2025—the effective price for beneficiaries of the Pradhan Mantri Ujjwala Yojana (PMUY) has been reduced by 44%. This brings the cost down from Rs. 903 in August 2023 to Rs. 503 in February 2025.
The current retail price for a 14.2 kg domestic LPG cylinder in Delhi stands at Rs. 803. However, after applying a targeted subsidy of Rs. 300 per cylinder for PMUY consumers, the effective price drops to Rs. 503. This subsidy is available to over 10.33 crore Ujjwala beneficiaries nationwide, making it the largest program of its kind globally, aimed at providing affordable LPG to low-income households.
Strategic Diversification of Energy Sources
The Indian government is actively monitoring global energy markets to ensure a stable supply of crude oil and mitigate risks associated with dependence on a single region. To achieve this, Public Sector Undertakings (PSUs) have diversified their petroleum import sources, procuring crude oil from various geographical locations. This strategy is part of a multi-faceted approach to reduce reliance on crude oil, which includes promoting natural gas usage, renewable energy sources, and enhancing domestic oil and gas production. Several policies have been introduced to boost domestic production, such as the Hydrocarbon Exploration and Licensing Policy (HELP) and the Discovered Small Field Policy. The government is also investing approximately Rs. 7,500 crore in acquiring seismic data to improve exploration efforts in both onshore and offshore areas. These initiatives aim to increase the share of natural gas in the economy and transition towards a more sustainable energy framework.
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