Govt Bears Rs 30,000 Crore Loss After Fuel Duty Cut

The Centre’s decision to slash excise duty on petrol and diesel from 27 March 2026 has resulted in a Rs 30,000 crore revenue shortfall for the current fiscal year. Policymakers opted to shield consumers from rising global crude prices by taking the hit on government finances. With tensions affecting oil supply routes through the Strait of Hormuz, petrol now carries Rs 3 per litre excise while diesel is fully exempt. The reduction was implemented overnight and visible at retail outlets within a day. Opposition parties highlight the jump from Rs 71 per litre in 2014 to about Rs 98 today as evidence of high taxation. Officials respond that the earlier figure concealed deferred costs stemming from oil bonds issued by the UPA government, amounting to Rs 1.34 lakh crore. Repayment of those bonds continues under the present dispensation. Data indicates Rs 10,000 crore paid in 2021-22, Rs 31,150 crore in 2023-24, Rs 52,860 crore in 2024-25 and Rs 36,913 crore in 2025-26, excluding interest charges. Unlike past practice, the current cut in duties did not create hidden liabilities for future taxpayers. The loss was recorded transparently and no fresh bonds were floated to finance the relief.