The Finance Ministry said it will use fiscal and administrative measures to mitigate the impact of global fuel price volatility while adhering to its fiscal consolidation roadmap.
The government highlighted its ₹10-per-litre excise duty cut on petrol and diesel in March 2026 and said public sector oil marketing companies absorbed part of the rise in international crude prices to limit retail fuel price increases.
Alongside short-term measures, the Centre plans to diversify crude oil import sources, expand Strategic Petroleum Reserves, promote cleaner fuels and strengthen domestic revenue mobilisation to improve India's energy security.
The Union Finance Ministry informed the Lok Sabha on August 4, 2026, that it will deploy administrative and fiscal measures to curb fuel price volatility.
Submitting a written response, the ministry outlined strategies to protect the nation's economy against outside energy fluctuations while sticking to its financial consolidation plan, Moneycontrol reported.
1 August 2026
Get the latest issue of Outlook Business
Minister of State for Finance Pankaj Chaudhary said the government will manage these interventions within existing budgetary limits to preserve macroeconomic stability.
"The Government's strategy is to accommodate such measures within the available budgetary space by closely monitoring revenue and expenditure trends, reprioritising expenditure and taking appropriate fiscal measures as warranted by evolving economic conditions," Chaudhary said.
Cushioning Consumers From Shocks
The government cut the central excise tax on petrol and diesel by Rs 10 a litre during March 2026 to shield buyers from surging international fuel costs.
Advertisement
"The excise duty reduction partly offset the under-recoveries being absorbed by Public Sector Oil Marketing Companies (OMCs), enabling them to continue supplying fuel without disruption," Chaudhary said.
He highlighted that state-run companies absorbed the price shocks amid geopolitical tensions.
"Since the beginning of the West Asia conflict, the retail prices of petrol and diesel have been increased marginally by the PSU OMCs despite sharp increases in international crude oil prices," he added.
International energy markets experienced upward pressure when Brent crude values hit a high of $138.2 a barrel during April 2026. However, retail price increases remained minimal.
"Moreover, the impact on consumer prices remained relatively contained, with average CPI inflation at 3.9 per cent during April–June 2026, below the RBI's inflation target of 4 plus, minus 2 per cent," the Finance Ministry stated.
Advertisement
Ensuring Long-Term Energy Security
The Finance Ministry committed to following its fiscal consolidation roadmap while executing targeted administrative and fiscal interventions. The government seeks to minimise the economy's vulnerability to future external energy shocks through a multi-pronged approach.
Long-term strategies involve diversifying crude oil import sources and expanding the country's Strategic Petroleum Reserves.
The administration also plans to promote alternative and cleaner fuels alongside initiatives to improve overall energy efficiency.
These structural energy transition efforts will be backed by strengthening domestic revenue mobilisation. The government will closely monitor its revenues and expenditure to support sustainable economic growth.
