Government Cuts Excise Duty on Petrol and Diesel by ₹10/Litre to Absorb Oil Shock

Early–Mid March 2026
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Source: CNBC ‘Inside India’ Newsletter; Petroleum Minister Hardeep Singh Puri statements; Nomura Research Note

In response to surging global oil prices, the government cut central excise duties on petrol and diesel by ₹10 per litre each. Petroleum Minister Hardeep Singh Puri acknowledged this would be a “huge hit” on government tax revenues. Nomura estimated the annual fiscal impact at approximately ₹1.65 lakh crore ($17.6 billion). The government also ordered refineries to halt petrochemical production and divert all propane and butane capacity to produce cooking gas (LPG) for households, given that 91% of India’s LPG is imported from the Gulf.

💰 Impact on your wallet: Without this excise cut, petrol prices would have jumped ₹15–20 per litre. The government absorbed the shock, but at a fiscal cost — higher deficit means more government borrowing, which could keep interest rates elevated longer. It’s a trade-off: lower fuel prices today versus potentially higher loan rates tomorrow. If you’re a diesel vehicle owner or run a transport-dependent business, the cut saves you ₹3,000–5,000/month. The LPG diversion means cooking gas shortages should not become severe, though prices have risen and may rise further if the conflict extends

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