Why Modi government is staring at ₹1L crore revenue hit
What's the story
Finance Minister Nirmala Sitharaman has said that cutting excise duties on petrol and diesel will cost the government ₹1 lakh crore in revenue. The announcement was made at a recent event in Mumbai where Sitharaman defended India's economic growth and countered what she called a deliberately pessimistic narrative around it. Her comments come as oil marketing companies (OMCs) raised fuel prices for the fourth time in 10 days.
Market impact
Petrol, diesel prices increased by nearly ₹7.5 per liter
Since May 15, when petrol and diesel prices were hiked for the first time in a long time, rates have gone up by nearly ₹7.5 per liter. The excise duty cut on these fuels will bring down their prices at the pump across India. This move is expected to give direct relief to households and businesses amid continued volatility in global energy markets due to the ongoing West Asia crisis.
Economic pressures
Challenges more external than domestic, says Sitharaman
Sitharaman attributed the challenges facing the Indian economy mainly to external factors, not domestic policies. She said India remains one of the world's fastest-growing major economies and cited various high-frequency indicators that show industrial demand remains strong and growth momentum continues. "Challenges are more external—foreign exchange is needed for gold, fuel, and fertilizer imports," Sitharaman said.
Claim
FM addresses attempts to undermine India's economic achievements
Sitharaman's statement highlights India's heavy reliance on imports for three major foreign exchange outflows: gold, crude oil and petroleum products, and fertilizers. All these are vulnerable to global commodity cycles and currency fluctuations. The Finance Minister also addressed attempts by some to undermine India's economic achievements amid external pressures, calling such commentary unhelpful and inaccurate.