Won't lower fuel price for consumers, relief only in narrative: Cong slams Centre over excise cuts amid West Asia War

The Congress party on 27 March claimed that the government's excise duty cuts will not change prices for dealers and consumers, and that the relief exists only in the narrative, not in reality.

The reaction of the country's principal opposition party comes after the Union government slashed excise duty on petrol to ₹3 per litre and fully exempted diesel from excise duty.

The Congress said the government should focus on delivering actual relief to consumers, instead of "manufacturing headlines and fooling people."

“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,” Congress party's media and publicity department head, Pawan Khera, said.

As of now, prices remain the same for dealers and for consumers, he claimed.

"What has actually been reduced is the 'special additional excise duty', a levy paid by Oil Marketing Companies to the government. The words 'special' and 'additional' reveal how unnecessary this tax is," Khera said on X.

He pointed out that these companies had 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," the Congress leader said.

"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," he said.

In another post, Khera noted that fuel prices have risen over the years, regardless of crude prices.

"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 USD 70 per barrel. But petrol was selling at ₹94.72 per litre, and diesel at ₹87.62 in Delhi," he said.

India also bought crude oil from Russia at a discounted rate, but the benefit did not translate into relief for consumers, he said. "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!"

Global cruce prices

Global crude prices have risen by almost 50% since the United States and Israel launched military strikes against Iran on 28 February, triggering sweeping retaliation from Tehran.

In a notification issued on 26 March, the Finance Ministry cut excise duty to ₹3 a litre from ₹13, while the levy on diesel was slashed to nil from ₹10. The duty cuts are effective immediately, the ministry said.

“Government has taken a huge hit on it(s) 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,” Union Minister for Petroleum and Natural Gas said in a post on X.

Despite the spike in international prices, retail pump rates have not been adjusted, putting oil companies' finances under strain, news agency PTI said, adding that the government's cuts are expected to provide some relief to oil companies.

International oil prices touched $119

International oil prices touched $119 per barrel earlier this month, before pulling back to around $100 per barrel. India imports 88% of its crude oil and roughly half of its natural gas. These mostly come via the Strait of Hormuz.

The conflict in West Asia has entered its fourth week, disrupting trade routes through the Strait of Hormuz. Tensions escalated following the killing of Iran's 86-year-old Supreme Leader, Ayatollah Ali Khamenei, in joint military strikes by the US and Israel on 28 February.

In retaliation, Iran targeted Israeli and US assets across several Gulf countries, causing further disruptions to the waterway and impacting international energy markets as well as global economic stability.

According to a statement released by the Ministry of Petroleum and Natural Gas, "All retail outlets are operating normally across the country," even as there were reports of panic buying in some areas due to rumours.

(With PTI inputs)