In a sharp political development, the Indian National Congress has criticised the Modi government over the recent hike in excise duty on petrol and diesel by ₹2 per litre each. The new rates take excise duty on petrol to ₹13 per litre and on diesel to ₹10 per litre. This decision, announced on Monday, comes despite a 41% decline in international crude oil prices compared to 2014 levels.

Kharge Accuses Government of Ignoring Public Hardship

Congress President Mallikarjun Kharge, in a post on social media platform X, launched a scathing attack on the government. In his Hindi post, he questioned the logic of increasing fuel duties when global crude oil prices are at their lowest since April 2021.

“The government seems to be rubbing salt into the wounds of the public. Not only has the market lost ₹19 lakh crores due to tariff mismanagement, now they’re burdening the common man further,” Kharge said.

He labelled the central administration as a "plundering government" and accused it of failing to pass on the benefits of lower crude prices to the public.

Government’s Stand: No Change in Retail Prices

In response to the criticism, the Ministry of Petroleum and Natural Gas clarified that public sector oil marketing companies (OMCs) will not increase the retail prices of petrol and diesel despite the rise in excise duty. This is possible because the expected retail price drop—due to falling international oil prices—is being offset by the increase in excise duty.

The oil ministry posted on X stating:

“PSU Oil Marketing Companies have informed that there will be no increase in retail prices of petrol and diesel, subsequent to the increase effected in Excise Duty Rates today.”

Falling Crude Prices: Global Trade Tensions to Blame

International oil markets have been under pressure lately, primarily due to escalating trade tensions between the United States and China. These tensions have triggered fears of a global economic slowdown, which in turn is affecting oil demand forecasts. As a result, crude prices have plummeted, reaching levels not seen since April 2021.

Despite this, the government chose to raise the excise duty, stating that retail customers won’t be impacted directly. However, the Congress argues that the move deprives consumers of the rightful benefit they should receive from falling global prices.

Political Timing and Financial Implications

The timing of the excise duty hike is being widely debated. Just days after stock markets witnessed a crash erasing ₹19 lakh crore in investor wealth, the fuel tax decision is seen by many as adding to public anxiety. Critics, including Congress leaders, have pointed out that this could impact inflation, transport costs, and eventually hit household budgets.

Kharge further added that small and large investors alike are facing losses, and the government's fuel policy is worsening public sentiment at a time when economic confidence is already shaken.

Analysis: What This Means for the Common Citizen

Even though retail fuel prices remain unchanged, the government’s move has fiscal implications. By increasing the excise duty without passing on the price benefits, the Centre is improving its revenue position, possibly to bridge fiscal gaps. However, this raises questions about transparency and consumer benefit sharing.

If crude prices remain low for an extended period, and excise duty hikes continue, there's a risk that the government could become habitually reliant on fuel taxes for revenue, rather than systemic economic reforms.

Industry Viewpoint: Balance of Policy and Profit

While political leaders voice concern, oil companies have maintained silence beyond the government's official statement. Experts say that this move helps the OMCs recover their margins without affecting price-sensitive retail segments. However, the lack of price drop despite lower crude costs remains a point of contention for the public.

Fuel prices in India have long been decontrolled, meaning that their movement should reflect global price trends. However, government interventions in the form of excise duties often counterbalance these market dynamics, making the system less transparent and more politically driven.

Final Take

The debate surrounding the latest excise duty hike is far from over. While the government maintains that retail prices will not rise, the opposition accuses it of robbing the public of lower fuel costs amid a market crisis. This move also highlights how fiscal needs often override economic logic, especially when public sentiment is fragile.

The Congress' sharp criticism, led by Mallikarjun Kharge, may gain traction among the public, especially those already feeling the financial pinch from market volatility and inflationary pressures.

Key takeaway: Even if prices at the pump don’t change, the government’s move reflects a deeper shift in how fuel policy is being used for revenue generation rather than consumer relief.

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