The Union government shocked everyone by raising the price of domestic LPG and the excise taxes on petrol and diesel at a time when oil prices worldwide have fallen sharply. On April 8, even under the Ujjwala program for the poor, the excise duty on both fuels was increased by ₹2 per litre, and the price of LPG cylinders was increased by ₹50.
This move has drawn sharp criticism from the opposition, and rightly so. Brent crude oil prices have dropped by over 14% since January, now hovering around $64.62 per barrel. Compare that with its all-time high of $147 in 2008, and it’s clear that global rates are nowhere near crisis levels. So why are Indian consumers being asked to pay more?
Union Petroleum Minister Hardeep Singh Puri defended the LPG hike by stating that both Ujjwala and non-Ujjwala users will now pay ₹550 and ₹853 respectively for a 14.2 kg cylinder. At the same time, the government insists that retail prices of petrol and diesel won’t rise because oil companies are managing the cost internally.
But here’s the catch: oil marketing companies have been recovering their past losses ever since prices were frozen ahead of elections in 2022. With global prices now declining, the government had an opportunity to pass on the benefit to consumers. Instead, it chose to shore up its revenue through higher taxes.
According to reports, the government has already collected ₹8.09 lakh crore from excise duties on fuel between FY21 and FY23. Increasing duties again—especially when international prices are down—raises serious questions about pricing transparency and fairness.
These hikes are likely to hit middle- and low-income households the hardest. LPG is a daily necessity, not a luxury. And while the government claims that fuel prices won’t immediately go up, higher excise duty reduces the room for future cuts even if global rates drop further.
This decision reflects a troubling trend: instead of offering relief in times of global softness, the government is tightening the grip on common citizens’ wallets. In a year when inflation continues to pinch and jobs remain uncertain, the move feels both mistimed and unfair.
-Team CFA