NEW DELHI, May 18 : The SBI research report has said the recent hike in the petrol and diesel prices are going to have no direct impact on the fiscal situation.
SBI Ecowrap said the historical data shows that hike in petrol and diesel price has been followed by a decline in consumption immediately after the hike, only to recover thereafter with no decline visible in the annual consumption levels.
“Further, immediate impact on CPI inflation is likely around 15-20 bps in May-June 2026. So we revise our FY27 forecast to 4.7%. There is no direct impact of this hike on the fiscal situation,” it said.
The current increase in oil price by Rs 3 provides a relief of Rs 52,700 crore in under-recoveries, which is 15 per cent of the expected total loss of the OMCs in financial year 2027.
“If we assume that the Government reduced the excise duty on petrol and diesel to zero from its current level of 11.9% and 7.8% respectively, it will lead to reduction in government revenue/gain of OMCs to the tune of Rs 1.9 lakh crore. This might increase fiscal deficit by 0.5% of GDP, if the government doesn’t reduce the expenditure,” the report added.
The report said, “Our estimates suggest that states would lose Rs 0.8 lakh crore if Centre’s excise duty is reduced to nil, keeping all else same. However, higher oil prices will benefit states by around Rs 30,000 crore, so the net impact of excise duty cut on states revenue would be Rs 50,000 crore.”
On Sunday, the Trump administration has allowed a sanctions waiver on Russian seaborne crude to expire. This will add to the woes of India, as the country managed to survive one of the worst global oil shocks in recent years through a narrow opening. (UNI)
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