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Fuel Price Hike Provides Rs 52,700 Crore Relief to OMCs: Report

A recent fuel price increase of Rs 3 per litre provides Rs 52,700 crore relief to oil marketing companies, trimming their mounting losses. The relief equals roughly 15% of expected total losses in FY27, according to a SBI Research report. Under-recoveries surged as retail prices were kept unchanged amid rising Brent crude, with government estimating OMC losses at about Rs 1,000 crore per day. The report notes that further rupee depreciation could offset the gains from the price revision.

Key Points: Fuel Price Rise Gives Rs 52,700 Crore Relief to OMCs

  • Fuel price hike of Rs 3 per litre provides Rs 52,700 crore relief to OMCs
  • Relief equals 15% of expected total loss of OMCs in FY27
  • Under-recoveries surged due to unchanged retail prices amid rising Brent crude
  • Rupee depreciation could negate intended benefits
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Fuel price rise likely provides Rs 52,700 crore relief to OMCs: Report

Recent fuel price hike of Rs 3 per litre offers Rs 52,700 crore relief to OMCs, trimming under-recoveries. SBI Research report details impact on inflation and fiscal situation.

"Immediate impact on CPI inflation is likely around 15-20 bps in May-June 2026. - SBI Research"

New Delhi, May 16

The recent retail fuel price increase of Rs 3 per litre will trim mounting losses at oil marketing companies and provide up to Rs 52,700 crore worth of relief in their under‑recoveries, a report said on Saturday.

The report from SBI Research said that the relief is equal to roughly 15 per cent of the expected total loss of OMCs in FY27.

Under‑recoveries on petrol and diesel have surged because retail prices were kept unchanged amid rising Brent crude, with the government estimating OMC losses at about Rs 1,000 crore per day and roughly Rs 3.6 lakh crore a year.

The report said the fuel price hike is unlikely to reduce annual oil consumption, as historical patterns showed consumption dips immediately after price hikes but recovers over the year.

"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 per cent. There is no direct impact of this hike on the fiscal situation," the report noted.

Notably, the government has earlier reduced the excise duty by Rs 10 on diesel and petrol during the year to help

The OMCs for which the revenue loss for the centre is estimated as Rs 1.1 lakh crore.

A similar rationalisation of excise to zero to aid OMCs would cost the centre about Rs 1.9 lakh crore and states about Rs 80,000 crore.

The report flagged that a further depreciation of the rupee could negate the intended benefits, saying that an additional depreciation of Rs 2 from the FY27 average of Rs 94 to the dollar would fully offset the gains from the domestic fuel price revision.

"The rupee has already approached a critical depreciation threshold, beyond which further currency weakness could substantially erode the intended benefits of domestic fuel price revisions," it explained.

- IANS

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Reader Comments

P
Priya S
It's good they finally did something. OMCs were bleeding Rs 1,000 crore per day, that's unsustainable. But the report says rupee depreciation could erase all gains. With dollar at Rs 94, we need stronger economic fundamentals, not just price hikes.
V
Vikram M
The SBI Research says consumption recovers after price hikes. That's classic Indian resilience! But Rs 3.6 lakh crore loss per year is staggering. Maybe we should push for electric vehicles faster instead of this endless cycle of hikes and relief.
J
James A
As an expat living in India, I find these fuel price dynamics fascinating. Back in the US, prices fluctuate daily based on global oil. Here, the government shields consumers until it can't. Rs 52,700 crore relief sounds huge, but it's only 15% of actual losses. Tough balancing act.
R
Rohit P
Typical bureaucratic math. Hike prices on public, call it 'relief' for OMCs. Why not reduce government taxes on fuel? Excise duty cuts would help both OMCs and consumers. ₹1.1 lakh crore revenue loss is a choice, not an inevitability.
K
Kavya N
The report says inflation impact is only 15-20 bps. But for daily commuters and small businesses, every rupee matters. My auto driver uncle says his monthly expenses have gone up by Rs 1,200 after this hike. Numbers on paper don't tell the whole story! 🚗💸

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