On April 7, the Union government announced a ₹2 hike in excise duty on petrol and diesel, set to take effect from April 8. Interestingly, this increase won’t affect consumers at the pump. The Petroleum and Natural Gas Ministry clarified that despite the duty revision, retail prices will remain unchanged due to recent drops in international oil prices. The government has decided to absorb the tax hike by adjusting it against the expected reduction in prices, thereby maintaining the current rates—₹94.77 for petrol and ₹87.67 for diesel in Delhi.

International oil markets have witnessed a major slump, with Brent crude falling to $63.15 a barrel and West Texas Intermediate to $59.57—lowest since April 2021. The decline is attributed to rising trade tensions between the U.S. and China, sparking fears of a global economic slowdown. With India importing nearly 85% of its oil needs, such fluctuations deeply influence domestic strategies. However, this time, the government’s decision not to pass the excise hike to consumers appears to be a strategic move to keep inflation in check and avoid public backlash during a sensitive economic phase.

This isn’t the first instance of the Modi government adjusting excise duty based on global oil prices. Between 2014 and 2016, the duty on petrol and diesel was raised multiple times to boost revenue as global prices dipped. While such hikes helped the exchequer double its excise revenue from ₹99,000 crore in 2014-15 to ₹2,42,000 crore in 2016-17, they often sparked criticism. However, during rising oil prices, the government rolled back some of these hikes. Most recently, just before the 2024 general elections, it cut fuel prices by ₹2 per litre, indicating a pattern of price maneuvers aligned with political and economic timing.