Centre extended support of Rs 1.23 lakh crore to OMCs to offset under-recoveries due to West Asia crisis: Sources
New Delhi, June 9
The government extended financial support of approximately Rs 1.23 lakh crore to Oil Marketing Companies to cushion under-recoveries caused by the West Asia conflict and shield consumers from rising crude oil prices, central government sources said.
The sources told ANI that the support was extended for the initial 78 days of the conflict and includes excise duty cuts.
The government sources said the under-recoveries of Oil Marketing Companies continue to remain "at a high level of 652 crores per day following the increase in import of crude oil and gas.
The daily burn has kept pressure on OMC margins as global crude prices stayed elevated through the conflict period.
The financial package for OMCs was aimed at preventing immediate fuel price hikes for retail consumers. By absorbing part of the cost through budgetary support and duty adjustments, the government sought to manage inflationary impact while oil imports remained high, the sources said.
On the fertilizer front, government sources said the market is going to be very stressed, with the fertilizer pool narrowing and prices going up. "Don't see fertilizer prices coming down," a source added.
To address the strain, the Fertilizer ministry has sought a 100% hike in subsidy allocation against the budgetary allocation of Rs 1.77 lakh crore for the current fiscal, the sources said. Higher global gas and raw material costs have squeezed margins and have also limited availability of key nutrients.
Gold imports have seen a reduction with sources attributing it to the higher import duty imposed earlier.
The duty hike has cooled the demand and narrowed the trade deficit impact from the yellow metal.
On the disinvestment plans, government sources confirmed that the disinvestment of IDBI Bank will happen. "Process is on, IDBI disinvestment will happen for sure," a source said. It remains a key item in the government's divestment pipeline for FY27.
Despite global headwinds, government sources said the growth of economy is not under stress. High-frequency indicators show domestic demand continues to support activity. Consumption, services and infrastructure spending are holding up, providing resilience against external volatility from oil and fertilizer markets.
— ANI
Reader Comments
Finally some relief for us common people. With the way crude prices were rising, I was dreading the next petrol hike. But 652 crores per day under-recovery is alarming! Hope the conflict in West Asia ends soon for everyone's sake. 🕊️
This is all well and good, but what about transparency? The government says it's supporting OMCs but we never see the actual impact on our bills. Excise duty cuts are temporary. Meanwhile, fertilizer prices are going up, farmers are struggling. Need a more long-term solution, not just band-aids!
As someone working in the trade sector, I can tell you the gold duty hike has actually cooled demand a lot. That's one positive step. But the fertilizer subsidy increase is worrying - if prices don't come down, it'll hit our farmers hard during the kharif season. Need better planning. 🌾
Disinvestment of IDBI Bank is long overdue! Government should focus on selling stakes in PSUs rather than just giving support to OMCs. This financial package might be necessary but where is the accountability? We need to see actual reduction in fuel prices for consumers. Just my two paise. 🏦
Really appreciate the government stepping in to shield us from the global oil crisis. The economy seems resilient, but I worry about the long-term impact on inflation. Hope the West Asia situation stabilizes soon. Meanwhile, let's try to use fuel wisely, yaar! Every drop counts. 💧🇮🇳
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