The Centre will keep deploying fiscal and administrative measures to shield consumers and the economy from future fuel price shocks, while remaining committed to its fiscal consolidation roadmap, the Finance Ministry told Parliament on Aug 4.
The ministry highlighted ongoing efforts to strengthen domestic revenue mobilisation, adhere to the fiscal consolidation path, diversify crude oil import sources, expand Strategic Petroleum Reserves, promote alternative and cleaner fuels, and improve energy efficiency. These steps aim to reduce the economy’s vulnerability to external energy shocks and support sustainable growth.
In response to a query in Lok Sabha, Minister of State for Finance Pankaj Chaudhary said the government would fit such interventions within the available budgetary space. The plan involves closely monitoring revenues and expenditure, reprioritising spending where needed, and taking appropriate fiscal measures as economic conditions evolve.
Chaudhary added that this approach would allow the government to react to unforeseen external shocks, such as spikes in international crude oil prices, while continuing to meet budgetary commitments and preserve macroeconomic stability.
The ministry also noted that the measures are designed to enhance energy security and support resilient economic growth.
The government reduced central excise duty on petrol and diesel by Rs 10 per litre in March 2026 to cushion consumers from high global crude oil prices. This cut helped offset under‑recoveries being absorbed by Public Sector Oil Marketing Companies (OMCs), enabling them to continue supplying fuel without disruption.
Chaudhary observed that since the start of the West Asia conflict, retail prices of petrol and diesel have increased marginally by the PSU OMCs, despite sharp rises in international crude oil prices. Brent crude prices hit a peak of $138.2 per barrel in April 2026, putting upward pressure on global energy markets and domestic producer prices.
The ministry added that the impact on consumer prices remained relatively contained, with average CPI inflation at 3.9 per cent during April–June 2026, below the RBI’s inflation target of 4 ± 2 per cent.