India's petrol and diesel prices rose by just 4.4 per cent — the smallest increase among major economies — as the Centre slashed excise duties and directed public sector oil companies to absorb massive under-recoveries, even as global crude costs surged past $100 a barrel. The controlled hike stands in stark contrast to fuel price increases of 10 to 90 per cent seen across much of the rest of the world.

How the Government Contained the Hike

The Centre reduced excise duty on petrol and diesel, forgoing an estimated ₹30,000 crore in revenue. Simultaneously, public sector oil marketing companies were directed to absorb under-recoveries of ₹24,500 crore on petrol and diesel before any price revision was passed on to consumers.

On domestic liquefied petroleum gas (LPG), oil companies absorbed an additional ₹40,000 crore in losses to keep cylinder prices unchanged for household consumers, according to a senior government official.

The Actual Price Increase

India's oil marketing companies raised petrol and diesel prices by ₹3.91 per litre, implemented in two tranches — a hike of ₹3 per litre followed by 91 paise per litre. An Indian Oil official noted that this partial revision came only after 76 days of complete cost absorption by public sector companies, meaning consumers were shielded from rising crude costs for over two months before any adjustment was made.

The Central excise component of fuel pricing is uniform across all states. Pump prices vary due to the value-added tax (VAT) levied by individual state governments. States with the highest pump prices include Telangana, Kerala, Karnataka, and Tamil Nadu, while Gujarat, Uttar Pradesh, Delhi, Haryana, Goa, and Assam record the lowest prices.

Global Comparison: How India Fares

The scale of India's price containment becomes clear when set against international benchmarks. In Pakistan, petrol prices rose approximately 55 per cent over three months; in Malaysia, around 56 per cent; and in the United Arab Emirates, roughly 52 per cent. Myanmar also saw petrol prices climb by more than half their pre-conflict levels, with diesel rising even more sharply given its direct link to global freight costs.

In advanced economies, the increases were smaller in percentage terms but still substantial. American petrol prices — which respond quickly to crude movements because federal and state excise loadings are modest — rose by close to 45 per cent, with diesel up 48 per cent. In Europe, where higher excise duties cushion the swing, the United Kingdom recorded increases of about 19 per cent on petrol and 34 per cent on diesel; Germany saw rises of about 14 per cent and 20 per cent respectively; and France posted increases of around 21 per cent on petrol and 30 per cent on diesel.

In Asia, Japan, South Korea, and Singapore kept petrol price hikes below 20 per cent, though diesel rose considerably faster — Singapore registered a 65 per cent jump in diesel prices.

What This Means for Consumers and the Exchequer

The combined fiscal cost of this policy — government revenue foregone plus oil company under-recoveries — amounts to roughly ₹94,500 crore across petrol, diesel, and LPG. This is a significant short-term burden on both the exchequer and state-owned energy firms, raising questions about the sustainability of the subsidy approach if crude prices remain elevated. With global oil markets still volatile, the government's next move on fuel pricing will be closely watched by both consumers and financial markets.