India Bears Rs 1 Lakh Crore Fuel Subsidy Burden As Global Oil Prices Surge
India’s oil firms face Rs 1 lakh crore losses in 10 weeks as fuel prices remain unchanged.
State-run oil marketing companies in India are absorbing massive financial losses of around ₹1,600–1,700 crore per day—crossing ₹1 lakh crore in just 10 weeks—as they continue to supply petrol, diesel, and LPG at prices significantly below global cost levels amid an ongoing global energy shock. The financial strain is being borne by Indian Oil Corporation (IOC), Bharat Petroleum Corporation Limited (BPCL), and Hindustan Petroleum Corporation Limited (HPCL), which have maintained stable retail fuel prices despite a sharp rise in crude oil costs.
According to sources, global crude oil prices have surged by nearly 50% in recent weeks due to geopolitical tensions in the Middle East, but domestic fuel prices remain unchanged at approximately ₹94.77 per litre for petrol and ₹87.67 per litre for diesel. Liquefied Petroleum Gas (LPG) prices were increased slightly in March by ₹60 per cylinder, but remain well below actual market-linked costs, leading to widening under-recoveries across all major fuel categories.
The combined “under-recovery” — the gap between retail selling price and actual cost — has now reached record levels. Officials estimate that the daily loss for the three state-owned companies stands at ₹1,600–1,700 crore, with cumulative losses exceeding ₹1 lakh crore over the past 10 weeks. Despite these losses, the companies have continued uninterrupted fuel supply across the country, avoiding rationing or sharp price hikes seen in several other global markets.
Sources indicate that the oil marketing companies are now facing mounting pressure on their balance sheets, with concerns emerging over liquidity and borrowing requirements. Companies may need additional working capital loans to sustain crude purchases and operational costs if elevated global prices persist. While core investment areas such as refining expansion, energy infrastructure, ethanol blending, and clean fuel transitions are expected to continue, officials acknowledge that some capital expenditure timelines may need reassessment depending on financial conditions.
A senior source noted that sustained pressure on oil company finances could impact long-term investments in strategic areas such as refining capacity, pipelines, energy transition projects, and emergency fuel reserves. However, these sectors remain central to India’s energy security strategy, and continued government support is expected to ensure stability in supply and infrastructure development.
Meanwhile, analysts point out that many countries, including Japan and the United Kingdom, have already increased fuel prices by up to 30% following the global energy disruption. In contrast, India has largely shielded consumers through a combination of stable pricing and reduced excise duties. The government is estimated to be absorbing a revenue loss of around ₹14,000 crore per month due to cuts in fuel taxes, further highlighting the scale of fiscal support being extended to stabilise retail prices.
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