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Modi’s Fuel Tax Hike: Why Rs 2 More When Oil’s Dirt Cheap Globally?

Modi’s Fuel Tax Hike: Why Rs 2 More When Oil’s Dirt Cheap Globally?
08 Apr

 

The Modi government’s at it again—slapping a Rs 2 per litre excise hike on petrol and diesel, even as global crude prices are sliding. What’s the deal? It’s a revenue grab, plain and simple, to patch up budget holes from tax cuts and keep the fiscal engine humming. Oil Minister Hardeep Singh Puri says don’t panic—retail prices won’t budge yet, but LPG’s up Rs 50 a cylinder. Let’s break it down!

Why Now? Cash Rules Everything
Global crude’s crashing—Brent hit $63 a barrel, a four-year low, per oil ministry stats. Normally, that’d mean cheaper fuel for us, right? Nope. The government’s hiking excise to rake in extra bucks after slashing middle-class income taxes in the 2025 Union Budget (thanks, Nirmala Sitharaman) and ditching windfall taxes for oil giants like Reliance. Puri says the Rs 2 boost—adding Rs 28,000 crore yearly, per estimates—will cover LPG losses for oil companies. Research shows India’s aiming for a 4.4% GDP fiscal deficit by 2026; this is Modi’s way of keeping the math tight without hitting your wallet… yet.

No Relief for the ‘Aam Aadmi’
Here’s the kicker: India imports 85% of its oil, so low crude prices are a goldmine. But historically, Modi’s crew hasn’t shared the love. Back in 2020, when crude went negative (yep, below zero!), excise duties still spiked—Rs 13 on petrol, Rs 16 on diesel. Between 2014-2016, they jacked it up nine times as oil crashed, ballooning collections from Rs 99,000 crore to Rs 2.42 lakh crore by 2017. Fast forward: despite rollbacks when prices peaked (Delhi hit Rs 105.41 for petrol in 2022), this hike’s got Congress crying foul. Mallikarjun Kharge on X raged, “Crude’s down 41% since 2014, but Modi’s plundering us!”

What’s the Plan?
Puri’s playing coy—“If low crude sticks, expect cuts later.” Translation: they’re watching oil hover around $60-$63 (WTI’s at $59.57) and betting on stability. Posts on X show mixed vibes—some hail “Modinomics” for shielding consumers (oil firms eat the hit), others scoff, “Same old tax trap!” With Trump’s tariffs sparking trade war fears and stocks tanking Rs 19 lakh crore, per Kharge, this feels like a bold flex. Will pump prices drop? Only if crude stays cheap and politics shift.

FAQ: Why Doesn’t Cheap Oil Mean Cheap Fuel Here?
India’s government leans hard on fuel taxes—20% of petrol’s price, 17.6% of diesel’s, per PTI. When global oil dips, they hike excise to fund stuff like roads and LPG subsidies instead of cutting pump rates. It’s been their playbook for 11 years—revenue over relief.

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