As assembly elections across four states conclude, attention is shifting back to a critical economic concern: fuel prices. Speculation is mounting that petrol and diesel rates, which have remained steady despite prolonged geopolitical tensions in the Middle East, could soon see an upward revision. While the government has consistently dismissed such claims, the sustainability of this price control is increasingly being questioned.
Crude oil prices, which hovered around $70 before the Iran conflict, have surged past $100 and even touched $126 at one point. This sharp rise has placed a significant burden on state-run oil marketing companies, which have absorbed the cost to maintain stable retail prices, leading to mounting financial losses.
A recent PTI report, citing government sources, indicated that a price hike in petrol and diesel cannot be ruled out. Meanwhile, state-owned fuel retailers have already increased prices of commercial LPG, industrial diesel, 5-kg LPG cylinders, and jet fuel for international airlines, aligning them with rising input costs.
Interestingly, whilecrude pricesremain elevated, domestic LPG rates have not been revised. However, commercial LPG (19 kg) saw a steep hike of Rs 993 recently, signalling that price adjustments are already underway in select segments.
IMF Pushes For Market-Driven Pricing
Amid these developments, the International Monetary Fund (IMF) has urged India to allow fuel prices to reflect global market realities. It argues that artificially suppressing prices may not be viable for long.
“They (govt) have cut excise taxes on oil. They provide some fertiliser subsidies. This can continue for some time, not much more in terms of fiscal space. At some point in time, you have to allow price signals to start to flow. And that’s something which is true for India,” IMF's director for Asia Pacific Krishna Srinivasan said at an event organised by NCAER as reported by TOI.
He emphasised that higher prices could help moderate demand during supply constraints and recommended targeted subsidies for vulnerable groups.
The government, however, appears to disagree with the IMF’s assessment. RBI deputy governor Poonam Gupta highlighted India’s relatively strong fiscal position, noting a projected decline in gross debt from 83.4% of GDP in 2026 to 77.7% in 2031.
She pointed to prudent fiscal management, effective consolidation, and strong economic growth as factors that strengthen India’s resilience. Gupta also noted that the IMF had previously underestimated India’s growth trajectory.
Source: India Latest News, Breaking News Today, Top News Headlines | Times Now
